Elon Musk Sued By Twitter Investors For Delayed Stake Disclosure & Mishandling Acquisition

The shareholders of Twitter have sued Tesla CEO Elon Musk and Twitter for their handling of a disorganised acquisition procedure that is still going on

Elon Musk Sued By Twitter Investors For Delayed Stake Disclosure
Elon Musk Sued By Twitter Investors For Delayed Stake Disclosure

The shareholders of Twitter have sued Tesla CEO Elon Musk and Twitter for their handling of a disorganised acquisition procedure that is still going on and that has led to volatility in the company’s stock price. On April 4, Elon Musk had announced a huge stake in Twitter and suggested a takeover for $44 billion, or $54.20 per share, ten days later.

Further, Twitter’s share price has plummeted by over 12% since Musk’s purchase proposal, while Tesla’s is down almost 28%, as part of a broader sell-off in tech equities. Since Musk originally announced his stake, Tesla shares had dropped over 40% by the end of trading on Wednesday, CNBC reported.

However, it is pertinent to note that in order to finance the acquisition, he has both sold and pledged a portion of his Tesla shares as security for loans.

In addition to this, a lawsuit has been filed by Twitter shareholders accusing Elon Musk of engaging in “unlawful conduct” in order to cast doubt on his attempt to purchase the social media platform. According to the lawsuit, which has been filed late Wednesday in the United States District Court for the Northern District of California, the billionaire Tesla and SpaceX CEO attempted to drive down Twitter’s stock price intending to walk away from the transaction or negotiate a far cheaper acquisition price, Associated Press reported.

READ | Does Tesla CEO Elon Musk really want to buy Twitter?

The complaint has also named the microblogging platform, Twitter as a defendant, and it wants class-action status and financial compensation.

Musk profited financially by delaying mandatory disclosures: Twitter shareholders

Furthermore, Twitter shareholders argued that Musk profited financially by delaying mandatory disclosures regarding his Twitter holdings and by temporarily hiding his plan to join the social network’s board of directors in early April. Twitter shareholders even claimed that Musk broke California business laws on numerous fronts and participated in market manipulation.

According to a CNBC report, Musk has also been alleged of snapped Twitter stock while having inside information and private conversations with board members and executives, which included former CEO Jack Dorsey, a longtime friend of Musk’s, and Silver Lake co-CEO Egon Durban, a Twitter top executive whose company had previously invested in SolarCity before Tesla acquired it, the complaint added.

Musk announced earlier this month that he was keeping the Twitter purchase “on hold” in order to learn more about inauthentic behaviour on the network, including data on false or automated accounts. His complaints about “bots” were part of a plot to get a higher price or terminate the purchase, according to the shareholders’ lawsuit.

The complaint reads, “Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubt about the deal and drive Twitter’s stock down substantially in order to create leverage that Musk hoped to use to either back out of the purchase or to re-negotiate the buyout price by as much as 25% which, if accomplished, would result in an $11 billion reduction in the Buyout consideration,” CNBC reported.

The lawsuit, Heresniak v. Musk et al., was filed in California, and the shareholders are demanding a jury trial. The shareholders’ complaint is still being worked on.


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