Elon Musk can’t be trusted to complete merger, Twitter tells judge

The company told a Delaware Court of Chancery judge that it can't be trusted.

On the eve of the trial, the defendants declared they would close. In a filing that opposed Musk's motion to stay the trial, the company said that they asked to be relieved from a reckoning on the merits. In order to justify that relief, they propose an order that allows them an indefinite time to close on the basis of a conditional withdrawal of their unlawful notices of terminated employment. The proposal is an invitation to further delay.

Musk told the court that debt financing was on track, but that there was a problem.

Just this morning, a corporate representative for one of the lending banks testified that Mr. Musk has yet to send them a borrowing notice and has not otherwise communicated to them that he intends to close the transaction, let alone on any particular timeline. The bank further testified that the main task necessary to close the deal—memorializing the debt financing—could have happened in July but didn't because Mr. Musk purported to terminate the deal.

The trial was supposed to start on October 17 but was put on hold by the judge. She seems to have taken Musk's concerns into account because the grant of the stay doesn't give him an indefinitely closed company. There will be a new trial if Musk doesn't complete the purchase by October.

The action was stayed to allow the parties to close on the transaction. If the transaction doesn't close by 5 p.m. on October 28, the parties are told to contact me by email the next day to get trial dates.

Musk is the obstacle, Twitter says

Musk's motion for a stay blasted Twitter for wanting to continue litigation, claiming that they are recklessly putting the deal at risk and gambling with their stockholders' interests.

Musk should have completed the merger a long time ago, according to the reply.

The obstacle to terminating this litigation is not, as Defendants say, that Twitter is unwilling to take yes for an answer. The obstacle is that Defendants still refuse to accept their contractual obligations. For months, Defendants have pursued increasingly implausible claims and over and over sought to delay trial on the merits to enforce the Merger Agreement. Discovery has shown each and every one of those claims to be utterly without merit. It has also shown that Defendants have repeatedly breached their obligation to exercise reasonable best efforts to move toward closing. The merger should have closed long ago, as Defendants' recent concessions confirm.

The closing is expected to take place on or around October 28. The defendants wouldn't commit to any closing date. They want an open-ended out, at the expense of the stockholders, all the while being free to change their mind again.

“Twitter is entitled to its day in court”

Musk's proposed order asked for a stay without any admission of liability or prejudice to their claims. This provision will allow Musk to avoid the merger.

Musk provided no justification for failing to complete the merger already and breaching the obligation to use reasonable best efforts to close the merger. The merger agreement requires Musk to close the deal within two business days of all conditions being met. The merger was approved byTwitter shareholders.

There was a plea to keep the October 17 trial date, but also that the merger could be completed next week. In order to ensure complete relief in the event the closing doesn't happen, the filing said that the company should have its day in court. The defendants can and should close. This action should be brought to trial if they don't.