Elon Musk and Twitter at Odds Over Terms of Agreement to Close Deal

Representatives from Elon Musk and Twitter Inc. are still wrestling with the terms of an agreement that would allow for the purchase of the social media company, continuing months-long drama over the fate of the blockbuster deal.

The discussions are the last the two sides have had as a courtroom clash draws near. They were tacitly holding unsuccessful talks over a possible $44 billion price cut for the social media platform before Mr Musk reversed course on Monday and said he would return to the terms of the original agreement said with the matter familiar people.

Late Wednesday, officials from Mr Musk and Twitter attempted to work out the details of his proposal this week in a bid to stick to that original agreement, people familiar with the matter said. Sticking points include what would be required by either side for litigation over the stalled deal to be dropped and whether closing the deal would be conditional on Mr. Musk obtaining the necessary debt financing, some of the people said.

There was initially hope that an agreement could be reached on Tuesday or Wednesday to avert a trial due to start on October 17, the people said. The two sides have agreed to postpone Mr Musk’s testimony, which was due to begin Thursday in Texas, some of the people said, in a bid to continue efforts to reach an agreement on how to proceed.

Also Read :  Inside Russia, elite counts destructive cost of war as Putin escalates

The informal talks over a $44 billion purchase price cut took place over the past few weeks in a series of conference calls between lawyers and ended after both sides failed to agree on the terms of a potential deal, the people said.

The price cut talks had been halted before Mr Musk surprised Twitter by sending Twitter’s lawyers a two-sentence letter proposing to go back on the original terms.

Mr Musk’s apparent change of heart on Monday surprised many observers. The Tesla Inc. chief executive had spent the past few months going out of business after claiming Twitter had misled him about important elements of his business, including the amount of spam on his platform.

In July, Mr. Musk officially announced the deal and urged Twitter to sue him to go through with the transaction on the agreed terms. Mr Musk countered, claiming that Twitter misrepresented the health of its business and key metrics about users on its platform, which Twitter has denied.

Also Read :  Kansas Business Climate Reimagined

At the moment, the Delaware Chancery Court judge, who is presiding over the litigation, is moving forward with preparations for the trial.

Chancellor Kathaleen McCormick on Wednesday ordered Mr Musk’s team to look for other possible electronic messages solicited by Twitter as the two sides prepare for a five-day trial without a jury in Wilmington, Delaware. She said neither party made any effort to drop the litigation.

“The parties have not filed a condition to stay this lawsuit, nor has any party sought a stay,” the judge wrote Wednesday. “I am therefore continuing to put pressure on our process, which is scheduled to begin on October 17.”

The Musk team has aggressively attempted to obtain comprehensive information from Twitter, including a range of employee communications and data related to spam and fake accounts. These requests at times caused Chancellor McCormick’s frustration. She granted some requests but turned down others, once calling Mr. Musk’s data requests “absurdly broad.”

Legal experts have claimed from the outset that Twitter appeared to have the stronger arguments, in part because Mr Musk waived due diligence before agreeing to the deal and the merger deal gave Twitter the right to sue him to have him under a pull through the so-called concept “Specific Performance.”

Also Read :  Women in Small Business: Olive Pit Brewing’s Christine Cain

Still, even a small risk of Mr. Musk winning a lawsuit could be too much for a company the size of Twitter. For this reason, most break-deal cases end up in negotiated settlements, often with a small price reduction. Such was the case in a 2020 lawsuit between LVMH Moët Hennessy Louis Vuitton SE and Tiffany & Co. These parties agreed to a nearly 3% price cut to avoid a lawsuit.

While Twitter’s share price has held up due to the potential acquisition of Mr. Musk, its performance has declined. The company reported a decline in revenue in the second quarter, which it attributed to weakness in the advertising industry and uncertainty surrounding Mr Musk’s acquisition.

Mr. Musk has offered few specific details about his plans for Twitter, but he has said he wants to turn Twitter into a private company and unleash what he called extraordinary potential as a platform for free speech.

write to Cara Lombardo at [email protected] and Alexa Corse at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Leave a Reply

Your email address will not be published.