Elon Musk and Twitter Deal Could Be Realized Before Litigation Begins

Elon Musk is with engineers on SpaceX. (photo: twitter @elonmusk)

JAKARTA - Elon Musk and Twitter Inc are expected to reach an agreement to end their litigation as soon as Wednesday, October 5 and pave the way for the world's richest man to close a $44 billion acquisition deal on the social media platform.

According to a source familiar with the litigation matter to Reuters, Musk, who is also CEO of Tesla Inc., proposed to Twitter late Monday that he would change course and comply with an April agreement to buy the company for 54.20 per share if Twitter dropped its litigation against him.

Twitter's legal team has yet to accept the agreement and the judge said he was preparing for the upcoming trial.

"The parties have not put forward a provision to delay this action, nor has the party moved to stay. Therefore, I continue to urge that our trial begin on October 17, 2022," wrote Chancellor Kathaleen McCormick, a judge on Delaware's Court of Chancery, in a court filing statement, Wednesday, October 5.

Musk's proposal last Monday included a condition that the closing of the deal still awaits receipt of the necessary debt financing. A potential deal would likely remove that condition.

Twitter's legal team and attorneys for Musk informed the judge last Tuesday through them to try to address mutual mistrust and find a process to close the deal.

An attorney representing Musk's class action on behalf of Twitter shareholders wrote to McCormick to say Musk should be asked to make a "big deposit" if he again reneges on his commitment to closing the acquisition. Musk should also be held liable for interest for delays in closing the deal, said the letter from attorney Michael Hanrahan.

Musk canceled the deposition in late September, citing concerns about possible exposure of Twitter lawyers to someone who later tested positive for COVID-19, according to court filings published on Wednesday.

Twitter shares closed 1.3% lower at 51.30 on Wednesday. Stocks hit their highest level on Tuesday since Musk and Twitter agreed in April that he would buy the company for 54.20 per share.

Musk said in July that he was leaving the takeover agreement because he discovered Twitter had allegedly misled him about the number of fake accounts, among other claims.

Part of Musk's case is based on allegations by Twitter whistleblower Peiter "Mudge" Zatko that were published in August.

Twitter's legal team wants to investigate whether Quinn Emanuel's attorney Alex Spiro, who is leading Musk's case, communicated with the whistleblower in early May.

Twitter lawyers suspect that Zatko sent an anonymous May 6 email to Spiro. The sender claimed to be a former Twitter employee, offered information about the company and suggested communicating by alternative means.

Spiro said in a court filing last Wednesday that he never read the email until Twitter caught his attention and it appeared to be someone looking for work. Spiro also said he was not aware of the existence of Zatko's allegations before they were made public on August 23.