Elon Musk, the CEO of Tesla and SpaceX, announced the acquisition of Twitter on April 4 by closing the deal at $44 billion. Later on, he sold a portion of Tesla shares to collect equity to finance this deal. Due to this practice, the public has seen a decline of 28% in Tesla’s shares as a result of the sale of shares. Not only this, Musk is continuously delaying the process of acquisition of Twitter after the deal by stating that he is learning about the processing of fake accounts and those profiles that execute inauthentic activities.
Seeing this, the Twitter shareholders have filed a lawsuit against him, stating that Musk is benefiting himself financially from the postponement of this deal and has also broken the California corporate laws in many aspects. On account of this, the share price of Twitter has dropped more than 12%, which is alarming for the shareholders as well. Moreover, the shareholders added that Musk already knows all of the inside information about the company due to his close relations with board members and executives, including former CEO Jack Dorsey, a long-time friend of Musk’s, and Silver Lake co-CEO Egon Durban.
They say Musk has observed and examined everything at Twitter to decide on the deal. Musk declared that he had put the deal together“on hold”, which has caused a rage among Twitter shareholders. According to them, Musk is ultimately going to “cancel the deal or negotiate it for a better price” that would benefit him financially, which is against the rules of California.
The shareholders have filed a complaint against Musk which states, “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 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 further argued that in violation of the already decided deal, the state has the right to eliminate such members from further voting or any activity in this process according to the laws and regulations of California. But Twitter hasn’t responded to it since then. However, the complaint is officially filed in the Northern District of California court.
