A Delaware judge on Thursday ordered a halt to Twitter Inc's lawsuit against Elon Musk on the eve of trial, giving the billionaire time to finance his $44 billion takeover of the social media platform. The ruling followed days of uncertainty about Musk's intentions and removed the threat that the erratic entrepreneur would have to testify under oath this week about his claims that Twitter fraudulently misled him.
The judge's order said if Musk, the world's richest person,
failed to close by her October 28 5pm EDT deadline, she would schedule a trial
for November.
“We look forward to closing the transaction at $54.20 by
October 28th,” Twitter said in a statement. In an earlier court filing, the
company urged the judge to reject the proposal, calling Musk's plan "an
invitation to further mischief and delay."
Musk, chief executive of electric carmaker Tesla, was
scheduled to go to trial on October 17 and his Thursday deposition was
postponed by mutual agreement.
Twitter shares, which ended the day down 3.7 percent at
$49.39, rose 1 percent after hours as investors appeared reassured after days
of confusion. This week, Musk said he would purchase Twitter at the $54.20 per
share price he agreed in April, on the condition the deal could secure debt
financing.
That marked a reversal for Musk, who spent months in
litigation with Twitter as he tried to get out of the deal. He claimed Twitter
misrepresented the number of real users on its platform, among other claims.
Musk said in a Thursday court filing banks are working
cooperatively to fund the deal but he needed more time. He argued that a brief
delay was preferable to the months it would take for a trial and appeal.
Twitter had said Musk should have to close next week and it
said a corporate representative for a lending bank testified on Thursday that
Musk has yet to send them a borrowing notice and has not communicated that he
intends to close.
Major banks that committed to fund $12.5 billion, or about
28 percent of the deal, could be facing hefty losses as the swift pace of
interest rate hikes has ratcheted up market volatility and dampened appetite
for leveraged financing.
"There's still some uncertainty based on whether or not
Elon can find the actual financing to do the deal," said Randy Frederick,
managing director of trading and derivatives for the Schwab Center.
Musk has raised $15.4 billion by selling Tesla shares this
year and is leaning on large investors for a chunk of the financing, leading to
speculation over whether he will sell more of the electric-vehicle maker's
stock to fund the deal.
"Financing will eventually end up going through one way
or another. It is just a point of negotiating terms at this stage," said
Robert Gilliland, managing director at Concenture Wealth Management.
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