More Chaos Surrounding Twitter As Shareholders Sue Elon Musk And The Company Over Poor Handling Of Acquisition Deal

Just when you thought the drama surrounding Twitter and its respective acquisition was over, here comes some more shocking news.

The company’s shareholders have sued Elon Musk and the firm itself over what they believe is poor handling of an initial acquisition deal.

The shareholders referred to the entire episode as chaotic and were surprised to see the deal still being under consideration, despite the long period of time that has evolved. And that is also what has in turn led to a drastic swing in the prices of the platform’s shares.

On April 4, we saw billionaire Elon Musk unveil his major stake in the company, and then just ten days forward, we saw him propose a mega $44 billion deal where each share would be worth $54.20. Moreover, to help gain financing, we saw Elon Musk pull all the strings of his company Tesla to gain loans that would finance this breakout deal.

And while everything appeared to be going to plan, the Tesla CEO dropped a major bombshell when he accused Twitter of lying about its fake or spam accounts.

Twitter revealed in its official records how the number of fake accounts was 5% but Elon Musk failed to agree, adding how that was not possible and requested the CEO make the records transparent as to how this figure came into effect.

Twitter’s CEO denied Musk’s request and tried to justify the value but Elon Musk simply didn’t buy into it. And now, we’re standing in the middle of nowhere as Musk is yet to make the final call on the matter.

Ever since Elon Musk’s bid came into effect, we’ve seen the stock price for Tesla drop by 28% while that of Twitter declined by nearly 12%. But Tesla seems to have taken a major hit as Musk revealed the shares were dropped by more than 40% since he publicly disclosed his bid in April of this year.

On Wednesday, a lawsuit was filed by the company’s shareholders who claim they’ve had enough of the drama, and are now accused the billionaire of violating corporate laws in the state of California. They further claimed Musk was guilty of manipulating the market in several different ways.

To be more specific, the shareholders were quick to point out how strongly they believe the Tesla owner tried to gain financial benefits through a delayed disclosure of his real stakes in Twitter. Moreover, that in turn means he chose to deceptively hide his original plan of being a board member.

On the other hand, the complaint also goes on to mention how Musk continued to build up his shares in the company while gaining more information from insiders through private conversations that he held with its leading board of directors and executives.

Common names that have come forward include former Twitter CEO Jack Dorsey and Egon Durban who is the co-CEO for Silver Lake. Both of these men were close friends of the billionaire. Interestingly, both of these men are out, with one resigning and the other being ousted by the board.

In the same way, we’re also seeing how this new lawsuit accuses Musk of creating a certain level of uncertainty in people’s minds about whether or not the deal would come into effect or not, despite signing a contract that says he would be the one making the purchase.

At the start of this month, we saw Elon Musk mentioning how he would be putting the deal on hold as he carried on with his investigations regarding the number of inactive accounts across the network, including those that were labeled as fake or had been automated.

Now, the shareholders firmly believe that this was all being done to buy time so that a lower price for the acquisition deal would be generated or the deal would be killed altogether.

In accordance with laws of California, firms must exclude any board members from taking part in the vote of key proposals in case they’re involved in misconduct that’s linked to the proposal.

What we do know for sure is that there will be a trial involving a jury because that’s what the stakeholders want and their complaints could come up with more revisions in the future.

For now, there are no comments by either Twitter or Elon Musk on the matter.

Creator: MIKE BLAKE | Credit: REUTERS
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