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Judge halts Twitter lawsuit so Elon Musk can close deal by 28 October

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. (Image: Reuters)Premium
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. (Image: Reuters)

Chancellor Kathaleen St. Jude McCormick, head of the Delaware Chancery Court in her order said, if Musk fails to close deal by 28 October EDT deadline, then she would schedule a trial for November.

A Delaware judge halted Twitter Inc's lawsuit against Elon Musk, giving the billionaire time to finance his $44 billion takeover of the social media platform.

Chancellor Kathaleen St. Jude McCormick, head of the Delaware Chancery Court in her order said, if Musk fails to close deal by 28 October EDT deadline, then she would schedule a trial for November.

This order comes after Musk had asked to halt the upcoming Delaware court trial, where the Tesla billionaire was expected to fare poorly against Twitter's lawsuit to force him to complete his April merger agreement. Musk revived the takeover offer on Monday but said he needed time to get the financing in order.

“We look forward to closing the transaction at $54.20 by Oct. 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 Inc , was scheduled to go to trial on October 17 and his Thursday deposition was postponed by mutual agreement.

Twitter disputed Musk’s claim that the company is refusing to accept his renewed bid. Musk told Twitter earlier this week he’s ready to buy the company once again after trying to back out of the deal over the summer, accusing it of refusing to give him information about “spam bot" accounts on the service.

Twitter described Musk’s move to delay the trial as “an invitation to further mischief and delay" after his arguments for terminating the agreement haven't had merit.

Twitter shares, which ended the day down 3.7% 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% 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.

(With inputs from agencies)

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