- Since Musk’s takeover bid, Twitter’s share price has fallen more than 12%, and is down nearly 28% as part of Tesla’s broad selloff in tech shares.
- In a proposed class action lawsuit filed Wednesday, Twitter shareholders alleged that Musk violated California corporate laws on multiple fronts, and engaged in market manipulation in doing so.
- The shareholders’ complaint said their gripes about the “bots” were part of a plan to negotiate a better price or scrap the deal.
Twitter shareholder Elon Musk and himself are suing Twitter over its handling of a chaotic acquisition process that is still ongoing, and that has contributed to volatile price swings in the company’s stock price.
The Tesla and SpaceX CEO disclosed a significant stake in Twitter on April 4, and ten days later made a buyout offer for $44 billion, or $54.20 per share. He has sold and pledged a portion of his Tesla holdings as collateral for the loan to finance the deal.
Since Musk’s takeover bid, Twitter’s share price has fallen more than 12%, and is down nearly 28% as part of Tesla’s broad selloff in tech shares. Tesla’s share price has slashed nearly 40% since Musk first disclosed his stake.
In a proposed class action lawsuit filed Wednesday, Twitter shareholders allege that Musk violated California corporate law engaged in market manipulation on multiple fronts, and in doing so.
For one, they claim that Musk profited financially by delaying necessary disclosures about his stake in Twitter and by temporarily hiding his plan in early April to become a board member on the social network.
Musk also snapped shares on Twitter, the complaint said, while he knew insider information about the company based on private conversations with board members and executives, including former CEO Jack Dorsey, Musk’s longtime friend. and the co-CEO of Silver Lake. Egon Durban, a Twitter board member whose firm invested in SolarCity prior to its acquisition of Tesla.
Dorsey officially resigned from Twitter’s board of directors on Wednesday. Shareholders voted not to reestablish Durban.
The proposed class action lawsuit also argues that Musk broke California laws by raising doubts about whether he would complete the deal after signing a contract to buy it.
Earlier this month, Musk said he was putting the Twitter acquisition “on hold” to learn more about unauthenticated activity on the platform, including fake or automated accounts.
The shareholders’ complaint stated that their gripes about the “bots” were part of a plan to negotiate a better price or scrap the deal:
“Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubts about the deal and to create leverage that drove Twitter’s stock down substantially, which Musk bought.” was expected to be used to exit or renegotiate the purchase price by up to 25%, which, if completed, would reduce the buyout consideration by $11 billion.”
According to California state law, corporations in the state must exclude board members from voting on resolutions if they perpetrate any form of misconduct or are associated with those resolutions.
Twitter declined to comment. Musk did not return a request for comment.
The case, Heresniak v. Musk et al, was filed in California Northern District Court and the shareholders are seeking a jury trial. Shareholders’ complaint is subject to further revision.
Credit: www.cnbc.com /