Three days after Elon Musk said he wanted to return to his original agreement to buy Twitter for $54.20 a share, the Tesla CEO is asking the social media company to end all litigation in order to close the deal. Twitter is refusing to oblige.
In a filing with Delaware’s Court of Chancery on Thursday, Musk’s side said Twitter should drop the court date scheduled for Oct. 17, so that the necessary financing can be pulled together to wrap up the acquisition by Oct. 28.
“Twitter will not take yes for an answer,” the filing says. “Astonishingly, they have insisted on proceeding with this litigation, recklessly putting the deal at risk and gambling with their stockholders’ interests.”
Twitter, however, argued in its own legal filing, also released on Thursday, that it disagrees with Musk’s assertion that it is unwilling to accept the deal.
Instead, Twitter’s attorneys said that the deal’s obstacle “is that Defendants still refuse to accept their contractual obligations.”
“For months, Defendants have pursued increasingly implausible claims and over and over sought to delay trial on the merits to enforce the Merger Agreement,” the lawyers wrote.
Musk’s attorneys allege that by Twitter failing to agree to set aside its litigation, the upcoming court trial would “impede the deal moving forward.”
“Instead of allowing the parties to turn their focus to securing the Debt Financing necessary to consummate the transaction and preparing for a transition of the business, the parties will instead remain distracted by completing discovery and an unnecessary trial,” Musk’s attorneys wrote.
Twitter, however, alleged that Musk and his legal team are being disingenuous. Only days before a trial was to commence, Musk’s team suddenly “declare they intend to close after all,” the lawyers claim.
“‘Trust us,’ they say, ‘we mean it this time,’ and so they ask to be relieved from a reckoning on the merits,” Twitter’s side wrote. “To justify that relief, they propose an order that allows them an indefinite time to close on the basis of a conditional withdrawal of their unlawful notices of termination coupled with an explicit reservation of all ‘claims and defenses in the event a closing does not occur.'”
“Defendants’ proposal is an invitation to further mischief and delay,” the Twitter lawyers added.
Twitter sued Musk in July to try and force the world’s richest person to stick to his purchase agreement, which was signed in April. Musk appeared ready to take the case to court, as legions of his text messages were released in preliminary filings.
While Twitter shareholders, at the company’s recommendation, agreed to Musk’s purchase price in September, Twitter may now be reluctant to walk away from its lawsuit without certainty that all the financing is available to close the deal.
Musk’s attorneys said that “By far the most likely possibility is that the debt is funded in which case the deal will close on or around October 28,” although they didn’t elaborate on to how exactly the debt would be funded. The lawyers added that “counsel for the debt financing parties has advised that each of their clients is prepared to honor its obligations under the Bank Debt Commitment Letter on the terms and subject to satisfaction of the conditions set forth therein.”
Morgan Stanley and Bank of America are among the banks that originally agreed to provide $12.5 billion in debt for Musk. Since then the markets have tanked, particularly for risky tech assets.
Twitter said in the legal filing that the Musk parties “should be arranging to close on Monday, October 10,” but is instead refusing to “commit to any closing date.”
“They ask for an open-ended out, at the expense of Twitter’s stockholders (who are owed $44 billion plus interest), all the while remaining free to change their minds again or to invent new grounds to avoid the contract ‘[w]ithout any admission of liability and without waiver of or prejudice to [their] claims and defenses,’ the attorneys wrote.
Earlier this week, Twitter acknowledged that it had received the letter from Musk and his attorneys in which they expressed their wish to buy Twitter for the original agreed-upon price. Twitter said in a response to the letter that “The intention of the Company is to close the transaction at $54.20 per share.”
However, Twitter did not say whether it would end its litigation against Musk.
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