Photo: Dimitrios Kamburis (Getty Images)
A team of Twitter shareholders are banding together to try to prevent the world’s richest man from getting out of buying Twitter.
In a proposed class action lawsuit filed earlier this week, Twitter shareholders accused Musk of engaging in market manipulation during his takeover bid, alleging he violated California’s corporate laws along the way. Twitter itself has also been named as the accused.
The lawsuit, filed in San Francisco Federal District Court, accuses Musk of deliberately lowering the value of Twitter’s stock. The lawsuit alleges that Musk did so because the $ 12.5 billion he pledged as collateral for the acquisition was secured by his shares in Tesla, which has fallen 37 percent since then. This decline, as claimed in the lawsuit, puts Musk in the awkward position of having to spend more of his own money to make up the difference. Deliberately lowering the value of Twitter in this scenario could theoretically serve as a corporate release card.
The lawsuit alleges that Musk “continues to make statements, send tweets and engage in conduct designed to cast doubt on the deal and significantly reduce Twitter shares in order to create leverage.” This leverage could potentially allow Musk to abandon the deal altogether or renegotiate at a significantly lower price. Shareholders also called nonsense about Musk’s alleged concern about bots on the platform and said he “knows everything about fake accounts.”
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“Musk’s conduct was and continues to be illegal in violation of the California Corporation Code and in violation of the contractual terms he agreed to in the deal,” the lawsuit said.
At least the first half of this supposed plan – intentional or not – seems to have worked. According to the lawsuit, Twitter has lost $ 8 billion in valuation since the buyout was first announced. However, it is worth noting that Twitter is far from the only technological action that has seen a decline in recent weeks.
The shareholders’ dispute with Musk is before the acquisition. In particular, the lawsuit disputes Musk’s announcement in April that he had acquired a 9% stake in the company. The lawsuit alleges that Musk did not disclose this in time with the Securities and Exchange Commission, a pass that has benefited Musk by more than $ 156 million.
Musk’s actions, the lawsuit alleges, have hurt both Twitter shareholders and Twitter employees. The lawsuit seeks damages for all Twitter shareholders and calls for compensation from the court, which, if approved, could potentially force Musk to continue acquiring the original price.
Twitter declined to comment.
You can read the full claim below.
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