Twitter shareholders sue Elon Musk and Twitter over chaotic deal
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TwitterElon Musk and Twitter are being sued by shareholders for their handling of the chaotic acquisition process. This has led to volatility in Twitter’s stock prices.
The Tesla and SpaceX CEO revealed a significant stake in Twitter on April 4, and ten days later proposed a buyout for $44 billion, or $54.20 per share. He has both sold and pledged a chunk of his Tesla holdings as collateral for loans in order to finance the deal.
Since Musk’s acquisition bid, Twitter’s share price has dropped more than 12%, and Tesla’s is down about 28% as part of a broad sell-off in tech stocks. Tesla’s share prices have fallen 40% since Musk disclosed his stake.
Twitter shareholders have filed a proposal for a class-action lawsuit on Wednesday alleging that Musk infringed California corporate lawsand engaged in market manipulation on multiple fronts.
One, Musk’s financial benefit is claimed by them. He delayed disclosures of his Twitter share and hid his plans to be a member of the Board at Twitter in April.
The complaint alleges that Musk bought shares in Twitter while knowing insider information about company. This was based on conversations between Musk and Silver Lake’s co-CEO Egon Daurban. Durban is a member of the Twitter board whose firm previously invested in SolarCity, before Tesla purchased it.
Dorsey officially resigned on Wednesday from Twitter’s board of directors. Shareholders voted not to re-instate Durban.
In the proposed lawsuit, Musk is accused of violating California laws. He sowed doubt that he would sign the agreement to purchase it after signing it.
Musk stated earlier this month that he would be putting the Twitter acquisition “on hold”To learn more about fraudulent activity on the platform including fake accounts or automated accounts,
According to the shareholders, his complaints about bots were part of an elaborate scheme to either negotiate a lower price or terminate the deal.
Musk made statements and sent tweets to discredit the deal. He hoped that this would create enough leverage to force Twitter to drop 25%. If Musk succeeds in his goal, Musk will see a $11 billion decrease in buyout consideration.
California’s state law requires corporations to expel board members from voting on propositions if they engage in misconduct that is relevant to the proposals.
Twitter refused to comment. Musk didn’t respond to requests for comment.
Heresniak v. Musk et al was filed at a California Northern District Court. The shareholders seek a jury trial. Further revisions to the shareholders’ complaint are possible.