WILMINGTON, Del., Oct 5 (Reuters) – Elon Musk and Twitter Inc (TWTR.N) An agreement to end their lawsuit could be reached in the coming days, clearing the way for the world’s richest man to close a $44 billion deal for his social media company, a source familiar with the matter told Reuters.
Musk is also the CEO of electric car maker Tesla Inc (TSLA.O)He proposed to Twitter late Monday that if Twitter dropped its lawsuit against him, he would reverse course and buy the company for $54.20 a share, binding the April deal.
The two sides were expected to reach an agreement early Wednesday, but negotiations are continuing with a resolution expected to take much longer, the source said.
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However, Twitter’s legal team has yet to approve the deal and Chancellor Kathleen McCormick, a judge in Delaware’s Chancery Court, said she was preparing for a hearing.
“The parties have not filed a stipulation seeking a stay of this action, and neither party has moved for a stay. Therefore, I continue to press forward toward our trial beginning on October 17, 2022,” McCormick wrote in court Wednesday. Filing.
Musk’s proposal on Monday included a condition that the closing of the deal be contingent on obtaining debt financing. A potential deal would remove that condition, the source said, speaking on condition of anonymity because the discussions are confidential.
Twitter’s legal team and Musk’s lawyers on Tuesday renewed their efforts to find a process to overcome mutual distrust and close the deal with a judge.
Two companies that were interested in partially financing the deal were Apollo Global Management Inc (APO.N) and Sixth Street Partners, two sources told Reuters, have closed talks to offer up to $1 billion.
A lawyer representing the proposed class action against Musk on behalf of Twitter shareholders said in a letter to McCormick that Musk would be required to make a “substantial deposit” if he reneged on his commitment to shut down. Attorney Michael Hanrahan said in a letter that he would be liable for interest on delaying completion of the contract.
It’s unclear what Musk’s legal team has offered to settle, but Musk is scheduled to be deposed Thursday in Austin, Texas. The questioning is expected to be difficult, giving Twitter leverage in negotiations to close the deal.
Shares of Twitter closed down 1.3% at $51.30 on Wednesday. The stock hit its highest level on Tuesday since Musk and Twitter agreed in April to buy the company for $54.20 a share.
A diversion
Tesla shares fell 3.5% on Wednesday as investors worried that Musk would have to sell more shares of the electric car maker to finance the Twitter deal and that Twitter could be a distraction for the entrepreneur.
Musk sold $15.4 billion worth of Tesla stock this year, but analysts said he would need to raise an additional $2 billion to $3 billion if the rest of his funding remained unchanged.
Musk said in July that he was pulling out of the acquisition deal after finding that Twitter allegedly misled him about the volume of fake accounts, among other claims.
Part of Musk’s lawsuit is based on allegations by Twitter whistleblower Peter “Mudge” Zatko, which became public in August, and Musk’s legal team on Wednesday rejected the notion that they had inappropriate conversations with Zatko or spoke to him before his concerns became public.
Twitter’s legal team wants to investigate whether Alex Spiro, an attorney at Quinn Emanuel, the law firm that led the case for Musk, contacted the whistleblower in early May.
Twitter lawyers became suspicious of Jadko’s May 6 anonymous email to Spiro. The sender claimed to be a former Twitter employee and provided information about the company and suggested alternative means of contact.
Spiro said in a court filing Wednesday that he did not read the email until Twitter brought it to his attention and that it appeared to be someone looking for a job. Spiro also said he was unaware of Jatko’s allegations before they became public on Aug. 23.
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Tom Halls in Wilmington, Del. and reporting by Anirban Sen in New York; Additional reporting by Hyunjoo Jin in San Francisco Editing by Nick Zieminski, Matthew Lewis and Sam Holmes
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