Elon Musk and Twitter may reach $44 billion deal to end legal battle

WILMINGTON, Delaware: Elon Musk and Twitter Inc could reach an agreement to end litigation in the coming days, clearing the way for the world’s richest man to close a $44 billion deal for the social network, a source familiar with the matter told Reuters. .

Musk, who is also chief executive of electric car maker Tesla Inc, offered Twitter late Monday to reverse course and honor an April agreement to buy the company for $54.20 a share if Twitter dropped its lawsuit against him.

The two sides were expected to reach an agreement as early as Wednesday, but talks are ongoing and expected to take longer, the source said.

However, Twitter’s legal team has yet to accept the settlement, and Chancellor Kathleen McCormick, a judge in the Delaware Court of Chancery, said she was preparing for the looming trial.

“The parties have not filed a stipulation to stay this lawsuit, and neither party has moved for a stay. I therefore continue to insist that the trial begin on October 17, 2022,” McCormick wrote in court Wednesday. submission

Musk’s offer on Monday included a condition that the closing of the deal is pending the receipt of debt financing. A potential agreement would likely remove that condition, said the source, who spoke on condition of anonymity because the discussions are confidential.

Twitter’s legal team and Musk’s lawyers told a judge on Tuesday about their efforts to overcome their mutual distrust and find a process to close the deal.

Two firms that were interested in partially financing the deal, Apollo Global Management Inc and Sixth Street Partners, have ended negotiations for a total of $1 billion, two sources told Reuters.

A lawyer representing a proposed class-action lawsuit against Musk on behalf of Twitter shareholders said in a letter to McCormick that Musk should be required to pay a “significant deposit” if he again reneges on his commitment to shut down the company. He should also be liable for interest for the delay in closing the deal, according to a letter from attorney Michael Hanrahan.

It’s unclear what prompted Musk’s legal team to offer to settle, but Musk is scheduled to be deposed Thursday in Austin, Texas. The questioning is expected to be tough, giving Twitter leverage in the deal negotiations.

Shares of Twitter closed 1.3% lower at $51.30 on Wednesday. The stock hit its highest level on Tuesday since Musk and Twitter agreed in April that he would buy the company for $54.20 a share.

DISTRACTION

Tesla shares fell 3.5% on Wednesday as investors worry that Musk may have to sell more shares in the electric car maker to finance a deal with Twitter and that Twitter could be a distraction for the entrepreneur.

Musk has sold $15.4 billion worth of Tesla stock this year, but analysts say he may have to raise an additional $2 billion to $3 billion, assuming the rest of his funding remains intact.

In July, Musk said he was backing out of the takeover deal because he found Twitter allegedly misled him about the number of fake accounts, among other claims.

Part of Musk’s case was based on allegations by Twitter whistleblower Peter “Maj” Zatko that became public in August, and Musk’s legal team on Wednesday rejected the idea that they engaged in inappropriate negotiations with Zatko or spoke to him before his problems became public. .

Twitter’s legal team wanted to find out if Alex Spiro, a lawyer at the Quinn Emanuel law firm who handled Musk’s case, had communicated with the whistleblower back in May.

Twitter lawyers suspect that Zatko sent an anonymous email to Speer on May 6. The sender claimed to be a former Twitter employee, offered information about the company, and suggested alternative ways to communicate.

Spiro said in a court filing Wednesday that he never read the email until Twitter brought it to his attention and it turned out to be someone looking for a job. Spiro also said he was unaware of Zatko’s allegations before they became public on Aug. 23.

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