One of the most publicized corporate court disputes in decades may soon be resolved thanks to Elon Musk’s offer to purchase Twitter for the originally negotiated price of $44bn.
Less than two weeks before their trial was scheduled to begin in Delaware Chancery Court, the Tesla CEO issued a letter to Twitter asking to go through with the deal on Monday night.
According to a document filed with regulators on Tuesday, lawyers for Musk stated in the letter that the entrepreneur planned to close the deal at the previously agreed upon price of $54.20 per share once debt financing was received, provided the court halted the legal action and adjourned the upcoming trial and related proceedings.
The company’s “intention is to conclude the transaction at $54.20 per share,” according to a statement released by Twitter after the letter was received.
A source close to the court told the New York Times that the judge, Kathaleen McCormick, held an emergency hearing with the parties via Zoom early on Tuesday morning.
A source familiar with Twitter’s legal strategy said the company is asking the court for stronger safeguards, including an order to offer assurances on time and certainty of shutting. The insider stated that the two parties are now discussing the potential details of the system.
According to two sources with knowledge of the situation, a new emergency court meeting in which both parties will brief the judge is scheduled as early as Tuesday night.
Someone with knowledge of Twitter’s internal affairs has said that the company is worried that Musk may be willing to proceed through with the deal in an attempt to postpone a trial. Later this week, Musk was supposed to take a deposition. Before trading was suspended, Twitter shares had risen substantially after Bloomberg reported that Musk planned to proceed with the deal. After resuming, trading on Twitter ended with a 22 percent gain, with shares ending at $52.
The CEO of Tesla had agreed in April to acquire Twitter for $54.20 per share. After just a few months, in July of this year, he announced his intention to back out of the deal, citing his worries that the company had deceived authorities and investors about the prevalence of fraudulent accounts on its platform.
Twitter filed suit to force Musk to finish the deal, claiming that his attempt to back out was driven by preserving his financial interests amid a fall in tech stocks rather than legitimate worries about account numbers.
On October 17, the trial was scheduled to begin. Both parties have been accused of not cooperating in the pre-trial process, and subpoenas have been issued to investors, bankers, and others engaged in the deal. After Musk first announced his intention to withdraw, former Twitter executive Peiter Zatko made claims that the company misled users and regulators about its security practices; these claims were only made public after Musk’s company, and Twitter denied them. Last month, Musk amended his complaint to include these claims.
A deal that has captured the attention of the business world has taken an unexpected attempt as he tries to avoid a lengthy court fight that has already led to the disclosure of his private text conversations with prominent players in the IT industry.
A lot of people thought it was very unlikely that Musk could get out of the arrangement, but they were curious if he could and what it would signify for other merger and acquisition contracts.
Unless there were exceptional violations of the merger agreement, it was historically uncommon for purchasers who agreed to a deal to be able to exit it.
Many Wall Street banks have committed to provide $13 billion in financing, but with the recent sell-off in the leveraged finance market, they may be forced to fund at least some of the deal from their own resources.