Delaware Chancery Court Judge Kathaleen McCormick on Thursday stayed the legal battle between Elon Musk and Twitter Inc. until Oct. 28 to allow the two parties to close the deal.
Delving on the development, Future Fund analyst Gary Black suggested the deferral was to Musk’s advantage. The postponement of the trial date gives Musk more time to get the financing together, Black said.
Financial companies, including big Wall Street banks, are under pressure amid market uncertainties precipitated by a rising rate environment. Yields on bonds have shot up, creating distress in the credit market, which, in turn, has made it difficult for banks that have promised debt financing to resell the debt.
Secondly, the fund manager noted that the trading window for selling shares has been closed for Musk until Tesla Inc. reports its earnings on Oct. 19. If the billionaire needs to offload shares to close any funding gap, he can do it only after the earnings release, Black added.
Musk–Twitter Diverge
McCormick mentioned in the ruling that Musk is optimistic about the deal closing on or around Oct. 28 but Twitter is not confident enough. The social media platform’s lawyers said they oppose the motion for the stay, reasoning that Musk’s agreement will not ensure the transaction will close fast enough.Reacting to Twitter’s move, Musk’s lawyers argued in a filing that there was no need for an expedited trial to order the Tesla CEO what he is already doing.
“Yet, Twitter will not take yes for an answer. Astonishingly, they have insisted on proceeding with the litigation, recklessly putting the deal at risk and gambling with their stockholders’ interest, Musk’s team said in the filing.
The team also argued that proceeding toward the trial is not only an enormous waste of party and judicial resources but will also undermine the ability of the parties to close the transaction. The trial will be a distraction for Musk and team from working to secure the necessary financing and preparing for a transition of the business, it added.
