Elon Musk must close the deal with Twitter by the end of this week or face trial

New York (CNN Business) — Time is running out for Elon Musk to complete his Twitter acquisition deal.

Tesla’s billionaire CEO has until 5 pm ET this Friday to close the $44 billion deal. Otherwise, he will face a trial that was previously delayed to allow both sides to close the deal.

The high-stakes countdown comes after a months-long battle over a takeover that would put the world’s richest man in charge of one of the world’s most influential social media platforms, with huge potential impacts on company employees. , users and for online discourse in general.

In April, Musk agreed to buy Twitter for $54.20 per outstanding share and, weeks later, tried to end the deal. He initially cited concerns about the prevalence of bots on the platform and later added claims from a company whistleblower. Twitter sued him to go ahead with the acquisition.

The two sides were in the midst of a contentious litigation process preparing for the trial that was set to begin on October 17, when Musk told Twitter that he wanted to go ahead with closing the deal at the initially agreed price. The judge overseeing the case, Delaware Court of Chancery Judge Kathaleen St. Jude McCormick, gave the two sides until Oct. 28 to close the deal or face trial in November.

In the weeks since the litigation broke off, it appears that Twitter has continued to take steps toward closing the deal. Bloomberg reported last week that the company had frozen employee stock accounts in anticipation of closing the deal, and that lawyers for Musk and Twitter were preparing the paperwork to close the deal.

Musk, for his part, told Tesla shareholders that he was “excited” about Twitter, even admitting that he “obviously overpaid” for it.

However, it has been questioned whether the financing Musk had originally arranged to help finance the deal would go through as expected, after he spent months smearing the company and the market in general, including stocks of social networks, has decreased. Musk has used a mix of debt and equity financing for the deal, as well as putting up his own money, much of it likely from the sale of his Tesla shares.

Some experts have suggested that Musk may have to sell billions of dollars in additional Tesla stock to fund the deal, a move made easier for the CEO after the company reported quarterly earnings last week, plus more expensive after a recent drop in the automaker’s share price.

With the deadline just days away, investors and Twitter employees have been nervous.

Twitter shares fell briefly on Friday morning following a Bloomberg report affirmed that officials in the Biden administration were having discussions about the possibility of subjecting some of Musk’s companies to national security reviews, including the planned acquisition of Twitter.

However, when questioned by CNN, the administration rejected the report, which cited people familiar with the matter. “We are not aware of any such conversations,” National Security Council spokeswoman Adrienne Watson said in a statement. M&A experts have said that while such a review could complicate matters, it probably wouldn’t allow Musk to opt out of the takeover deal.

Separately, Twitter was forced to respond to employee concerns about the fate of their jobs after The Washington Post will inform on Thursday that Musk told potential investors in the deal that he planned to ditch nearly 75% of the company’s workforce. (Representatives for Musk did not respond to a request for comment on the report, which cited internal documents and unidentified people familiar with the matter.)

Following the report, Twitter General Counsel Sean Edgett sent a memo to staff saying the company “has no confirmation of the buyer’s post-closing plans and recommends not following rumors or leaked documents, but awaiting the facts.” from us and the buyer directly,” according to a Bloomberg report. A Twitter spokesperson confirmed to CNN the authenticity of the memo.

Musk had previously discussed slashing Twitter’s workforce in personal text messages with friends about the deal, which were revealed in court filings, and did not rule out the possibility of layoffs in a call with Twitter employees in June.

Despite his plans to downsize and his own claims that he is paying too much for the company, Musk has tried to sound optimistic about Twitter’s potential.

“Twitter’s long-term potential, in my opinion, is an order of magnitude greater than its current value,” he said on Tesla’s conference call last week. He has proposed several potential product upgrades and suggested that Twitter will become part of an “everything” app called x, possibly in the style of the popular Chinese WeChat app.

But the most immediate change for users, if the deal goes through, could be limiting Twitter’s content moderation and reinstating accounts that were previously banned from the platform, most notably former President Donald Trump’s.

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Elon Musk must close the deal with Twitter by the end of this week or face trial