Musk proposed this week to acquire Twitter at the original price of $54.20 per share, but Twitter did not agree.
On Thursday, Twitter said that Musk should (now) arrange to complete the acquisition transaction on October 10. The court that tried the case postponed the trial until October 28, which is the deadline for Musk's team to prepare for full financing to acquire Twitter.
Some analysts say that the acquisition will be completed as early as next week, but some people are worried that Musk will "run away" on the pretext that debt financing is unsuccessful. At present, Twitter's litigation trial arrangements for Musk to complete the acquisition have not been stopped.
After Musk let it go, Twitter quit
On Thursday, October 6, the Delaware Equity Court judge Kathaleen St. J. McCormick, who was in charge of the trial of the case, said that the trial of Musk's acquisition of Twitter was suspended until October 28. The judge demanded that Musk must complete the merger and acquisition transaction by 17:00 on October 28; if the transaction is not completed by then, the November trial date will be arranged.
It is worth noting that October 28 is the deadline for Musk’s team to prepare sufficient financing for the acquisition of Twitter. Some market analysts believe that the judge's decision means that Musk's team won a small victory before the trial and is expected to push Twitter to be brought under his command.
Musk proposed this week to acquire Twitter at a presumable price of $54.20 per share, on the condition that the Delaware Equity Court immediately ceased the lawsuit and postponed the trial and all other processes.
Musk's lawyers argued that Musk's financing parties "have stated that they are ready to fulfill their commitments" and are working to close the deal by October 28. The court previously booked a trial on October 17.
However, Twitter did not immediately agree to Musk's offer.
On October 6, Twitter said that Musk should (now) arrange to complete the acquisition transaction on October 10. But Musk refused to make a commitment on any potential closing date. A bank said Musk has not disclosed to them the date he completed the transaction. Musk "can and should" close the deal next week. The company opposes Musk's motion to "request the Delaware Equity Court to stop hearing the merger and acquisition case."
Musk's lawyer Edward Micheletti said in the court documents he signed:
Twitter will not agree to Musk's offer. , but surprisingly, they insisted on carrying out the lawsuit, putting the company at risk and betting on the interests of shareholders.
It is unlikely to exit the agreement as Twitter tried four months ago to sue Musk forcing him to complete the acquisition after he exited, and Twitter shareholders have voted to approve the acquisition. On the contrary, some media said that Twitter is likely to be seeking Musk's assurance now to ensure that Musk is serious this time and will not change his mind temporarily.
Columbia University law professor Eric Talley said on Thursday that Twitter "is absolutely correct not to accept Musk's offer, and everyone knows why. (They tried it in April, but it didn't work well)." He added that, however, if Musk really gave a specific gold, Twitter might consider Musk's offer.
What is the focus of the dispute between the two sides?
Some media said that the key to the $44 billion merger and acquisition case between Musk and Twitter is that whether the transaction can be completed depends on whether it can receive $13 billion in debt financing. However, there are no such contingent clauses in the initial agreement reached by both parties.
But Twitter doesn't think so. Twitter lawyer said in the document submitted to the court that the obstacle to termination of the lawsuit is not as the defendant said that Twitter is unwilling to accept the offer, but that the defendant still refuses to fulfill the contractual obligations.
In addition, media said Musk still intends to reserve the right to file fraud charges against Twitter executives. Previously, Musk claimed that Twitter executives misled him and other investors about the bot account issue.
Earlier this week, Musk made another proposal to acquire Twitter, hoping to end a protracted legal dispute that began with Musk trying to withdraw from the April acquisition of Twitter, which filed a lawsuit.
Twitter said earlier this week that the company intends to close the deal at an agreed price, but the two sides are still scheduled to open an October 17 trial in Delaware due to Musk's earlier attempt to terminate the deal. On Wednesday, the judge who presided over the case had said she would continue to advance the trial because neither party formally took action to prevent it. But on Thursday, the judge changed his mind and postponed the trial until the 28th.
acquisition of Twitter was blocked, and financing parties all wanted to run away
The key problem now is that institutional investors and banks that used to promise to provide funds for Musk's acquisition of Twitter may be considering withdrawal at a time when the risk asset environment has undergone tremendous changes this year.
On Thursday, Musk confirmed that private equity firm Apollo Global Management and Sixth Street Partners were originally interested in providing a total of $1 billion in preferred equity financing for the acquisition. The relevant negotiations had ended around July and the draw was quit. At that time, Musk happened to regret acquiring Twitter for reasons such as concealing false accounts, which triggered a lawsuit war with Twitter.
Musk said this spring that he raised $7.1 billion in third-party equity financing from technology investment tycoons such as venture capital firm Andreessen Horowitz and Oracle co-founder and chairman Larry Ellison. Relevant parties did not respond this week whether the terms were retained.
, which promised to provide at least $12.5 billion in debt financing for the acquisition, is likely to have financing difficulties due to the difficulties of the leveraged loan and the high-yield corporate bond market in recent months. Adverse financing environments may put them in significant losses.
Previously, Morgan Stanley , Bank of America and Barclays each promised US$2.5 billion in debt financing, BNP Paribas and Ruisui Bank and others promised to provide smaller additional financing.
When investors provide funds for such leveraged acquisition of , they usually try to sell their debts to external investors such as hedge fund and large institutions, reduce their own risks and charge handling fees. It has become more difficult to sell these debts in recent months and may even bring huge losses.
For example, in the largest leveraged acquisition of the United States this year when cloud computing company Citrix Systems will be privatized for $16.5 billion, Bank of America, Credit Suisse and Goldman Sachs were forced to sell $4 billion in bonds to investors at a discount of 16% two weeks ago, with a total loss of $500 million.
Given the above-mentioned experience of the leveraged loan vane case, Twitter debt financing is not optimistic either. Bank of America believes that Twitter's large-scale debt borrowing may lower its debt rating to the junk file. The interest rate gap between corporate bonds with CCC and US Treasury bonds has reached 13 basis points, and the debt financing cost doubled compared with the beginning of the year.
history is good Tesla Wedbush Securities analyst Daniel Ives also said that since the Twitter acquisition was just proposed in April to today, the market environment has changed dramatically, and leveraged loans and high-yield markets have been falling in the past few months, "this will be an ugly pricing."
market is worried about canceling the acquisition, or will the acquisition be completed next week?
Since one prerequisite for Musk to restart the acquisition of Twitter is that it "depends on the arrival of debt financing funds", many analysts are worried that Musk will try to use the bank's potential financing problems to get out again. If debt financing issues cause the acquisition to break down, Musk will pay $1 billion in "breakup fees", which is still much lower than the acquisition of Twitter for $44 billion.
However, Twitter may ensure that in the finalizing the acquisition details, Musk cannot use bank debt financing issues to exit the transaction again. The trial between Musk and Twitter has not been suspended since October 17, and the judge may ask Musk to sue the banks to demand that they fulfill their financing commitments. All these mean that Musk is in trouble again this time.
People familiar with the matter said that Musk is negotiating with Twitter, and the two sides hope to reach an agreement as soon as possible to end the legal lawsuit and complete the acquisition. It will be announced as soon as the next few days, that is, next week, or give up the wording "depending on debt financing" to protect Twitter's rights.
reported that before Musk unexpectedly announced the restart of the acquisition of Twitter on Monday, he had several unsuccessful negotiations on demanding that Twitter sell at a discount, and the bargaining chips ranged from 10%-30% to 30%, and were rejected by Twitter.
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Musk's acquisition encountered obstacles
