Elon Musk has three days to close his $44-billion Twitter deal or he will face a big legal battle.
Key Details
- After months of back and forth between Elon Musk and Twitter, the Tesla CEO’s deal to buy the company could officially be happening this week—possibly.
- Chancellor Kathaleen St. J. McCormick of the Delaware Chancery Court has given Elon Musk until Friday at 5 pm to close on his Twitter deal.
- If Musk decides to not go through with the deal for whatever reason he will face a hefty legal battle next month.
Why it’s news
Elon Musk and Twitter have been fighting for months as the Tesla CEO planned to buy the social-media company, but then backed out not long after.
Now Musk has reverted back to his original deal, but details have not yet been confirmed. The decision to go back to his original offer shocked most people, but some onlookers think that Musk has been trying to escape the deal for a while and he finally realized that Chancellor Kathaleen St. Jude McCormick is not playing games and would not let him escape the law so he decided to go back to the first offer.
Chancellor McCormick has now given Musk until Friday to finish the final details or a big court battle will be heading his way next month.
Some people have been wondering if Musk will change his mind again in the upcoming days, but many think that if he does Chancellor McCormick is done with his games and will rule in favor of Twitter forcing Musk to buy the social media company.
Concerns
There are many concerns with the deal, one being the financial investments.
It is a tough time for the banks that offered funding for Musk’s Twitter acquisition.
Many banks originally said they would help fund the Twitter deal including: Bank of America Corp., Barclays Plc and Mitsubishi UFJ Financial Group Inc., but now these banks could be facing big losses as they committed the money in better times and some could lose up to $500 million if the deal were to go through right now.
Although it is unlikely that the banks would back out after this long, if they did it could help Musk get out of the deal.
Backing up a Bit
The full timeline between Elon Musk and Twitter is long.
It all started in April, Elon Musk announced that he held a 9.2% stake in Twitter, which made him the social-media company’s largest shareholder. Twitter’s stock price soared 25% after the announcement.
Later that month, the billionaire entrepreneur offered to buy all of Twitter at $54.20 per share—equaling about $44 billion. He said he originally invested in the platform because he believes it is failing in its potential to be the leading platform for free speech around the globe. In fact, he asked his 2 million followers if Twitter adhered to principles of free speech, and 70% said “no.”
In July, Musk decided to back out of the deal, claiming there were too many fake accounts on the platform. Twitter has since sued Musk in Delaware Court of Chancery to complete the deal and requested the trial to take place in September. Musk, on the other hand, wanted to delay the trial until February 2023, stating that a case of this size takes time to prepare. Twitter was granted its wish of an expedited trial, with Chancellor Kathaleen McCormick, the presiding judge, setting a five-day trial for October.
Musk then countersued Twitter, stating his reason for the termination was due to Twitter not being upfront about the number of fake accounts on the platform.Then, Elon Musk and his legal team subpoenaed Twitter’s founder and former CEO Jack Dorsey, to get him to release documents that provide accurate information on bots and spam accounts on the social-media platform and now these documents have come out from Zatko and Musk and his lawyers have subpoenaed him as well. Then, Musk’s text messages were revealed in court filings and it showed that Twitter co-founder Jack Dorsey tried to facilitate Musk’s Twitter takeover, which led to Musk officially reverting back to his original deal to buy the social-media company.
