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New York
CNN Business
—
Lawyers for Elon Musk have filed a motion to stay the legal proceedings in its dispute with Twitter and to remove from the court’s calendar the trial that had been set to begin Oct. 17, noting “changed circumstances that have effectively mooted this action,” according to a Thursday court filing.
The filing — which says the stay is “pending the closing of the transaction” — comes after Musk earlier this week proposed proceeding with the $44 billion acquisition of Twitter at the originally agreed upon terms after having spent months trying to get out of the deal.
The letter states that Musk is “willing to close the transaction at $54.20, the Debt Financing parties are working cooperatively to fund the close, and closing is expected on or around October 28.”
But the letter also alludes to resistance from Twitter to halt the legal proceedings. “Twitter will not take yes for an answer. Astonishingly, they have insisted on proceeding with this litigation,” according to the letter.
Twitter did not immediately respond to a request for comment.
The letter offers the clearest indication yet that Musk’s financing may now be the central issue in the dispute between the Tesla CEO and Twitter over halting the legal proceedings and completing the deal. Musk has previously said he would pay for the acquisition through a mix of debt commitments from financial institutions, equity financing from investors and his own assets.
But legal experts have raised concerns that debt financiers may now want to pull out of the deal in light of recent changes to the debt market and declines in value of social media companies. Twitter, according to experts, would likely want to maintain the litigation as pressure on Musk unless he agrees to close the deal with or without the debt financing.
In the Thursday filing, Musk’s legal team stated that Twitter has resisted a stay based on concerns that Musk has made his offer to close the deal contingent on the receipt of the debt financing, and that payment could fall through. “Counsel for the debt financing parties has advised that each of their clients is prepared to honor its obligations,” Musk’s filing states.
The filing asks the court to stay the proceedings and order Twitter to complete the deal.
“Proceeding toward trial is not only an enormous waste of party and judicial resources, it will undermine the ability of the parties to close the transaction,” the filing states. “Instead of allowing the parties to turn their focus to securing the Debt Financing necessary to consummate the transaction and preparing for a transition of the business, the parties will instead remain distracted by completing discovery and an unnecessary trial.”
Earlier Thursday, lawyers for Musk and Twitter agreed to postpone the Tesla CEO’s deposition in the court fight, a source familiar with the negotiations told CNN. Musk’s deposition had been set to begin Thursday, per a notice filed earlier this week. It’s not clear whether a new date has been set for Musk’s deposition, but Twitter could end up pushing to complete it early next week if a deal is not reached.
As of Wednesday, the two sides had yet to reach a deal to close the acquisition, a separate source told CNN. Delaware Chancery Court chancellor Kathaleen St. Jude McCormick, the judge who is overseeing the litigation, said in a Wednesday court filing that neither side had filed to stay the proceedings and she was continuing to prepare for trial to begin on Oct. 17.
On Thursday, McCormick filed a letter to both sides laying out deadlines for responding to discovery motions, noting that the “trial is fast approaching.”
