Twitter-Elon Musk’s latest circus has shareholders in the social media company claiming class action lawsuits for a lawsuit against Tesla’s founding billionaire, alleging unjust enrichment, misrepresentation and manipulation of stock to lower the price or move away from the $ 44. billion agreement he had accepted.
Musk had originally financed the purchase in part by promising billions of dollars in Tesla shares as collateral for a bank loan. This became a problem as Tesla shares fell within 30 days of the announcement, the lawsuit says (read here) in the U.S. District Court in the Northern District of California. When Tesla shares fell, “Musk began making false statements and participating in the manipulation of the Twitter stock market,” including announcing that the deal was “pending.”
The lawsuit, filed Wednesday, also reviews the fact that Musk did not disclose his 9.2% stake in Twitter, based in San Francisco, when required, which the SEC is investigating, and the unusual way in which what events unfolded. That is, Musk first agreed to join the Twitter board as an ally, then overturned that decision in favor of a takeover bid and threatened to be hostile if Twitter did not accept.
Musk and Twitter signed the $ 54.20 cash deal per share in late April. It has yet to be approved by Twitter shareholders at a special meeting, but no date has been announced. It has been reported that Musk agreed to give up due diligence, or a deep immersion in the business of a company that is the norm in large acquisitions. Several weeks later, he focused on the spam or bot accounts of the service, saying he didn’t believe their Twitter accounts and that the deal was “temporarily suspended” until he had no further information. This lowered the price of Twitter shares “in order to create the leverage that Musk hoped to use to withdraw from the purchase or renegotiate the purchase price,” the lawsuit alleges.
He described Musk as “a unique, multimillion-dollar problem; 37% since purchase announcement “.
The leading shareholder is William Heresniak of Virginia. Twitter is named as a defendant along with Musk.
In a SEC filing also Wednesday, Musk pulled Tesla out of the equation, pledging to provide an additional $ 6.25 billion in capital financing for the purchase, totaling $ 33.5 billion, eliminating loans from margin against Tesla shares that were part of its original funding. .