Elon Musk Twitter saga could draw to end as deadline looms
McCormick was preparing to preside over a trial on 17 October in which Twitter was set to demand that the Tesla chief executive complete a takeover deal he signed in April. Now, what talk there is from Musk about Twitter is positive. The former president is banned from Twitter but Musk, a self-confessed “free speech absolutist”, has said he will reinstate his account.
It could be a busy November for Judge Kathaleen McCormick, depending on whether Elon Musk keeps to his word over the next week.The Delaware judge has given the world’s richest man a deadline of 5pm (New York time, 10pm London) on 28 October to complete a $44bn deal to buy Twitter , or else she will see him and the social media platform in court soon after.McCormick was preparing to preside over a trial on 17 October in which Twitter was set to demand that the Tesla chief executive complete a takeover deal he signed in April. Musk had backed out in July but, as the mid-October date loomed, he performed a surprise U-turn and re-committed to buying Twitter after all.Silence has been an indicator that Musk is serious about getting this done and that McCormick can turn her attention to other cases. There have been no tweeted broadsides at the company – Musk has more than 100 million followers on the platform – and no more legal salvoes from an advisory team that had been throwing everything at arguing the deal was dead.Now, what talk there is from Musk about Twitter is positive. Referring to the platform at Tesla’s quarterly results last week he said: “I think it’s an asset that has sort of languished for a long time but has incredible potential.” He later added: “The long-term potential for Twitter is an order of magnitude greater than its current value.”This is a far cry from the man who spent the summer, via his Twitter feed and a punchy countersuit accusing the business of misleading investors , trashing the company he recently agreed to buy. It means that even if the 28 October deadline is not met due to both sides falling out again, McCormick could end up presiding over a trial where, at this point in time, both sides want the same outcome.Brian Quinn, a professor at Boston College Law School, says he expects the deal to close one way or the other. The main barrier to progress, he says, would be an investigation into the deal by the Committee on Foreign Investment in the United States (CFIUS), which can review business deals and recommend they be suspended or blocked. Musk is buying Twitter with the financial support of non-US investors , including the Saudi Arabian investor Prince Alwaleed bin Talal Al Saud (who is already an investor in Twitter ). The White House has said it is not aware of any discussions of a security review of the deal.“The deal will close on Friday,” says Quinn. “If it doesn’t, we will be in trial a week or so later and – unless Musk has a very real and new excuse – the chancellor [McCormick] will not be happy to see them. If this goes to trial, absent the federal government big-footing the process through an ill-conceived CFIUS order, Musk will be ordered to do this deal.”Indeed, it is difficult to find a legal observer who thinks that Musk would not be ordered to complete a deal he agreed to carry out at $54.20 a share before he tried to back out in a row over the number of spam accounts on the platform. The legal system in Delaware, where Twitter is incorporated, has a reputation for backing agreed transactions.“I think that Musk will close the deal. He knows that he has no way out of it,” says Anat Alon-Beck, a law professor at Case Western Reserve University in OhioThe consortium of banks behind the $13bn (£11bn) debt funding package for the deal – Musk and his co-backers are covering the rest with their own money – has abandoned plans to sell on the debt to investors because of uncertainty over Musk ’s plans for the company, according to Reuters.That $13bn will go on Twitter ’s balance sheet which means the company will have to work hard to pay down its borrowings. In its most recent results, Twitter generated negative free cashflow (spending more cash to run the business than it takes in) of nearly $124m, a number which should be considered against the backdrop of a report that the Tesla chief executive is considering axing 75% of Twitter ’s 7,500-strong workforce. Musk will also have to resolve the future of Twitter ’s chief executive, Parag Agrawal. He tweeted a poo emoji at Agrawal and texts between the pair that were disclosed as part of the Delaware trial process indicated that Musk was becoming irritated with the Twitter boss. In May it was reported that Musk would appoint himself temporary chief executive of the company if he buys it.Then there is the question of Donald Trump. The former president is banned from Twitter but Musk , a self-confessed “free speech absolutist”, has said he will reinstate his account. Other banned accounts on Twitter include the conspiracy theorist Alex Jones, and Katie Hopkins, a rightwing British political commentator. Musk has described Twitter as “left-biased”. But it relies on advertising for 90% of its $5bn annual revenue and making the platform less appealing to advertisers and users by unleashing its least palatable former account holders could make Musk ’s job even harder – if he makes that 28 October deadline.