The latest in the Twitter-Elon Musk circus has shareholders of the social media company seeking class action status for a lawsuit against the billionaire Tesla founder, alleging unjust enrichment, false statements and stock manipulation in order to lower the price or walk away from the $44 billion deal he’d agreed to.
Musk had originally financed the purchase in part by pledging billions of dollars in Tesla stock as collateral for a bank loan. That became a problem as Tesla stock plunged in the 30 days after the announcement, says the suit filed in U.S. District Court in the Northern District of California. As Tesla stock dropped, “Musk beings to make false statements and engage in market manipulation of Twitter stock,” including by announcing that the deal was “on hold.”
The suit also revisits the fact that Musk didn’t disclose his 9.2% stake in San Francisco-based Twitter when he was required to – something the SEC is investigating – and the unusual way events unfolded. That is, Musk first greed to join the Twitter board as an ally, then reversed that decision in favor of a takeover bid and threat to go hostile if Twitter wouldn’t accept.
Musk and Twitter inked the $54.20-a-share cash deal in late April. It must be approved by Twitter shareholders at a special meeting but no date for that has been announced. Musk reportedly agreed to waive due diligence – or a deep dive into a company’s business that is the norm in big acquisitions. Several weeks later, he zeroed in on spam, or bot, accounts on the service, said he didn’t believe Twitter’s accounting of them and the deal was “temporarily on hold” until he had more information. That drove down Twitter’s stock price “in order to create the leverage that Musk hoped to use to either back out of the purchase or re-negotiate the buyout price,” the suit alleges.
It described Musk as having “a unique and multi-billion dollar problem Musk pledged his Tesla stock as collateral for a $12.5 billion loan to finance the buyout of Twitter, however Tesla’s shares have declined by over 37% since the announcement of the buyout.”
The shareholder leading the action is William Heresniak from Va. Twitter is named as a defendant along with Musk.
The suit was filed late Wednesday. In an SEC filing, also on Wed., Musk extricated Tesla from the equation, committing to provide an additional $6.25 billion in equity financing for the buyout – for a total of $33.5 billion – eliminating the margin loans against Tesla stock that were part of his original financing.
Must Read Stories
Sony Leveling Up PlayStation ‘Gran Turismo’ Pic With Neill Blomkamp Eyed To Direct
Jodie Foster To Star In Season 4 Of HBO Anthology Series ‘True Detective’
Misses Q4 Revenue & Profit Targets, But Streaming Pops; CEO: Starz Spinoff By Summer
A24 Gets ‘Close’; ‘Elvis’ Is In The Building; Latest Reviews, Deals & Video Interviews
Read More About:
Source: Read Full Article