Since Elon Musk sought to acquire the microblogging network, the Twitter-Musk scenario has been the talk of the town. Following the acceptance of the $44 billion deal, we’ve witnessed several twists and turns in this saga.
The most recent addition to the increasing list is a lawsuit filed by a Twitter stockholder against Musk. Here are the specifics you should be aware of.
A Lawsuit for Musk!
A Twitter shareholder (on behalf of other Twitter shareholders) had filed a complaint against Musk in federal district court in Northern California, accusing him of market manipulation when he purchased the company.
Musk is charged with buying Twitter at an “artificially low” stock price to benefit himself by postponing the disclosure of his holdings in the company.
He is accused of failing to file Form 13G after obtaining more than 5% of the Twitter stock. Musk started purchasing Twitter stock on January 31, 2022. According to the complaint, this behavior benefited him $156 billion.
Musk reportedly purposefully sent out tweets that cast doubt on Twitter, causing its stock to plummet in recent weeks. According to the court filing, Musk seems to have broken California company laws.
To put things in context, Musk started citing worries about the existence of too many spambots on Twitter, claiming that the acquisition has been placed on hold until he receives information on the actual amount of bots on the network. This was allegedly done to cancel the transaction or buy Twitter at a lesser price than the one suggested.
According to the lawsuit, “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 to create leverage that Musk hoped to use to either back out of the purchase or re-negotiate the buyout price by as much as 25%, which, if accomplished, would result in an $11 billion reduction in the Buyout consideration.”
According to the complaint, this behavior is unethical since Musk was previously aware of Twitter’s bot problem and committed to “waive comprehensive due diligence” to close the acquisition.
While Musk claimed to have put the transaction on hold, this isn’t possible since the buyout contract forbids it. Furthermore, after the formal announcement of the takeover, Twitter’s value dropped by $8 billion.
“Musk’s unlawful conduct has not only significantly affected Twitter’s shareholders by causing Twitter’s stock to fall by nearly 25%,” according to the lawsuit. “Musk’s wrongful conduct has also substantially impacted Twitter’s workers.”
It is yet unknown how this case will be handled. We don’t know whether the Twitter arrangement will be preserved, what Musk plans to do in retaliation, or anything else.
One thing is sure: this is an intriguing turn of events, and the only way to figure out what will happen next is to wait. Meanwhile, let us know what you think of this new development in the comments section below.