Elon Musk and Twitter Sued by Shareholders for Delayed Deal

Andrei Tapalaga

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Shareholders are saying that this was part of his plan to renegotiate the price or kill the dealKrzzzz/Pixabay

Since Elon Musk’s announcement of purchasing Twitter, the price of Twitter shares has been very volatile, with each piece of news and update about the deal driving the price up or down drastically. Twitter shareholders have come together to sue not only Elon Musk but also Twitter itself for not managing to handle the acquisition process which many argue has manipulated the price of shares in their own interest

It is not only the shareholders that are affected by the volatile price of the market but also the deal itself because Musk sees this volatility as decreasing the value of the deal, therefore he may ask for less.

 It is not only the price of shares but also other factors such as the number of fake Twitter accounts that are making Musk think this may not be the best deal. Shareholders are saying that this was part of his plan to renegotiate the price or kill the deal.

This is what the exact complaint from shareholders said:

“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 in order to create leverage that Musk hoped to use to either back out of the purchase or to re-negotiate the buyout price by as much as 25% which, if accomplished, would result in an $11 billion reduction in the Buyout consideration,” (The shareholders complaint is subject to further revisions)
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Chart representing Twitter shares price in the last 6 months.Google

Since the 5th of April when Elon Musk announced his intentions to purchase Twitter, the price had decreased by 12%. CNBC says that Musk purchased shares before the price had raised or better said before his announcement, presenting a strong case that most of this action was for his own personal gain. 

This is also based on the insider information he had received from board members as well as the former CEO Jack Dorsey who turns out to be an old friend of Musk. 

One of the arguments against the case is that the volatile price of shares has been caused by global inflation which drove the price in a downwards trend. Whilst that may be true, stocks are currently on a rising trend as inflation is slowing down

Heresniak v. Musk et al, was filed in a California Northern District Court and the shareholders are seeking a jury trial. Twitter has not commented and Musk is yet to comment on this matter. 

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