Elon Musk faces lawsuit from Twitter shareholder who accuses Tesla CEO of criticizing company he agreed to buy and casting doubt on deal to drive down value from Twitter.
The proposed class action lawsuit, filed Wednesday in the U.S. District Court for the Northern District of California, claims Musk was aiming to drive down Twitter’s stock price because he either wants out of the deal or negotiates a deal. lower purchase price.
The suit, which also names Twitter, argues that Musk’s attacks violated both the non-disparagement and non-disclosure clauses of his contract with the company.
“Musk continued to make statements, send tweets and engage in conduct aimed at creating doubt about the deal and significantly driving down Twitter shares to create leverage that Musk hoped to use to pull out. of the purchase or to renegotiate the agreement. redemption price up to 25%, which, if realized, would result in an $11 billion reduction in redemption consideration,” the suit states.
“Musk’s conduct was and continues to be unlawful, in violation of the California Corporations Code and contrary to the contractual terms he agreed to in the agreement,” the lawsuit adds.
Musk struck a deal last month to buy the social media company for $44 billion, but has since repeatedly complained publicly about Twitter. In particular, he took issue with the number of bots or spam accounts, which Twitter says make up less than 5% of accounts. Musk speculated at a tech conference earlier this month that the percentage of fake accounts could be as high as 95%.
He also announced he was putting the purchase on hold, but insisted he was still “committed” to the deal. He later said that a lower purchase price was not ruled out.
Since Musk’s takeover bid — and the grunts — Twitter’s share price has fallen more than 12% and Tesla’s about 28%.
Shares of Twitter closed Thursday at $39.54, 27% below Musk’s bid of $54.20 per share to buy the company.
Musk was using Tesla stock to fund the Twitter purchase. But he has since increased his personal funding by more than $6 billion and secured an additional $6.25 billion in equity funding, according to regulatory filings Wednesday.
The lawsuit also accuses Musk of insider trading by buying shares while talking to members of the company’s board of directors and failing to meet a legally required deadline to notify the Securities and Exchange Commission that he had acquired. a 5% stake in the company. The SEC sent a letter to Musk asking for an explanation for missing the deadline.
Musk could not be reached for comment, and he has not issued a statement about the lawsuit.
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