The trial between Elon Musk and Twitter that was scheduled to begin on October 17th is suddenly on hold. Judge Kathaleen McCormick granted the Musk side’s request for a stay, pending the closing of their deal for Musk to buy Twitter at $54.20 per share, just like the two sides agreed to on April 25th.
The two sides have been engaged in negotiations to complete the acquisition, and earlier this week, Musk filed a letter insisting that he would go through with the purchase after all. As my colleague Liz Lopatto wrote in today’s This Week in Elon email, Musk’s change of heart and request for a stay is happening just in time to put off his deposition in the case, which had already been rescheduled to take place today.
Musk’s lawyers argued, “Twitter will not take yes for an answer.”
The stay was granted over the protests of Twitter’s lawyers, who implored the judge not to take Musk’s words seriously. Twitter’s lawyer Kevin Shannon wrote in a letter to McCormick, saying, “Now, on the eve of trial, Defendants declare they intend to close after all. ‘Trust us,’ they say, ‘we mean it this time,’ and so they ask to be relieved from a reckoning on the merits.”
Musk’s lawyers insisted that the problem is actually with Twitter, as Edward B. Micheletti argued, “Twitter will not take yes for an answer. Astonishingly, they have insisted on proceeding with this litigation, recklessly putting the deal at risk and gambling with their stockholders’ interests.”
However, in a decision handed down on Thursday evening, McCormick paused the proceedings:
This action is stayed until 5 p.m. on October 28, 2022, to permit the parties to close on the transaction. If the transaction does not close by 5 p.m. on October 28, 2022, the parties are instructed to contact me by email that evening to obtain November 2022 trial dates
Twitter’s concerns about Musk’s seriousness cited his previous waffling on whether or not to buy the company and accusations of fraud, saying, “Defendants have pursued increasingly implausible claims and over and over sought to delay trial on the merits to enforce the Merger Agreement.”
Further, the lawyers expressed doubt Musk actually can close the deal like he says he will because he has not finalized plans for more than $12 billion in debt financing he’s due to receive from banks that are helping to put up money for the purchase. “Just this morning, a corporate representative for one of the lending banks testified that Mr. Musk has yet to send them a borrowing notice and has not otherwise communicated to them that he intends to close the transaction, let alone on any particular timeline,” writes Shannon.
Here’s McCormick’s full letter with the decision:
As well as the Musk team’s request:
And Twitter’s objection: