Photo: Dimitrios Kambouris (Getty Images)
A group of Twitter shareholders come together to try to prevent the richest man in the world from running away from buying Twitter.
In a class action lawsuit filed earlier this week, Twitter shareholders accused Musk of engaging in market manipulation during his takeover bid, alleging that he violated California corporate laws in along the way. Twitter itself was also named as the defendant.
The lawsuit, filed in a San Francisco federal district court, accuses Musk of intentionally reducing the value of Twitter’s actions. The lawsuit alleges that Musk did so because the $ 12.5 billion he pledged as collateral for the acquisition was secured by his Tesla shares, which have since fallen 37 percent. That decline, the lawsuit alleges, put Musk in an awkward position of having to shell out more money to make up the difference. The deliberate reduction in the value of Twitter, in this scenario, could theoretically serve as a corporate card to get out of jail.
The lawsuit alleges that Musk “proceeded to make statements, send tweets and engage in conduct designed to raise doubts about the deal and substantially reduce Twitter’s actions to create leverage.” This leverage could allow Musk to withdraw completely from the deal or renegotiate for a substantially lower price. Shareholders also call shit about Musk’s alleged concern with the platform’s robots and claim he “knew all about the fake accounts.”
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“Musk’s conduct was, and remains, illegal, in violation of the California Corporation Code, and contrary to the contractual terms he accepted in the agreement,” the lawsuit states.
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 purchase was first announced. However, it is worth noting that Twitter is far from the only technological value that has experienced a downturn in recent weeks.
Shareholders ’calf with Musk predates acquisition. Specifically, the lawsuit opposes Musk’s revelation in April that it had acquired a 9% stake in the company. The lawsuit alleges that Musk did not disclose it in time with the Securities and Exchange Commission, an omission that benefits Musk by more than $ 156 million.
Musk’s actions, the lawsuit alleges, harmed both Twitter shareholders and Twitter employees. The lawsuit seeks damages for all Twitter shareholders and calls for precautionary relief from the court, which if granted could force Musk to continue with the acquisition at the original price.
Twitter declined to comment.
Read the full application below.