A Delaware judge halted a court case against
Delaware Chancery Judge
The ruling hands a partial victory to
Acrimony between the parties escalated Thursday, with both sides trading barbs in court filings. Musk requested a pause in the hearing, saying the social media company “will not take yes for an answer” after he proposed
Talks between the two sides had
Following the judge’s ruling, Twitter General Counsel
“Our intention remains the same: to close the acquisition at the price and terms in the original merger agreement,” Edgett wrote in the memo reviewed by Bloomberg. “Thank you to all of the teams working hard to navigate these twists and turns.”
Within hours of McCormick’s order, Musk began tweeting about his plans for Twitter. “There will be very rapid product evolution,” he wrote in response to another user’s query. “Software engineering, server operations & design will rule the roost,” he continued in another post.
In their filing earlier Thursday, Musk’s lawyers had argued that a short pause would not harm Twitter. “In the event a closing does not occur, the litigation can promptly resume based on the then existing facts and whatever issues remain at the time.” But going ahead with the scheduled Oct. 17 trial, and the appeals that would follow, would have caused the deal to take “months” to complete, Musk’s lawyers said.
Twitter said it’s dubious of Musk’s promises, and said that a banker involved in the debt financing testified earlier Thursday that Musk had yet to send them a borrowing notice, and had otherwise not communicated to them that he intended to close the deal. The banker also said that “the main task necessary to close the deal -- memorializing the debt financing -- could have happened in July but didn’t because Mr. Musk purported to terminate the deal.”
“Now, on the eve of trial, defendants declare they intend to close after all,” Twitter said in its filing. “‘Trust us,’ they say, ‘we mean it this time,’ and so they ask to be relieved from a reckoning on the merits.”
Musk’s proposed stay “is an invitation to further mischief and delay,” the platform added. “Until Defendants commit to close as required, Twitter is entitled to its day in Court.”
The two parties had been gearing up for the week-long courtroom battle, which would have determined whether the billionaire had legitimate grounds to torpedo the buyout because of alleged fake user accounts. McCormick ruled against the
Seven banks, led by Morgan Stanley, fully underwrote the debt portion of the financing, according to an April filing. As is usual in this type of contract, banks originally planned to sell most of that debt to institutional money managers before the Twitter deal closed, but they have always been on the hook for providing the funding if anything went wrong.
There are very few, if any, ways for banks to get out of providing such debt commitments after signing the contract. And most banks wouldn’t want to, even if it meant preventing a loss, because backing out would reflect poorly on their investment banking business and could harm their ability to win new deals with companies and private equity firms in the future.
A representative for Morgan Stanley declined to comment about the Musk deal.
The case is Twitter v. Musk, 22-0613, Delaware Chancery Court (Wilmington).
(Updates with Musk tweets in eighth paragraph)
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