Elon Musk’s attempt to buy Twitter appears to have massively backfired after the company launched a lawsuit against him accusing him of buying stock at an artificially low price.
Twitter investors have sued the Tesla billionaire, claiming Musk saved $156 million by refusing to declare that he had bought more than 5 percent of Twitter by March 14.
They requested a class-action lawsuit and an unspecified amount of punitive and compensatory damages.
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The investors said: “By delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price.”
The complaint, filed on Wednesday, May 25, in San Francisco federal court, stated Musk continued to acquire stock after that and eventually announced in early April that he held 9.2 percent of the firm.
They also included Twitter as a defendant, claiming the business owed them an investigation into Musk’s conduct, though they are not seeking monetary damages from the company.
The recent decline in Tesla’s stock has put Musk’s ability to finance his acquisition of Twitter in “major peril,” as he has pledged his shares as collateral to secure the financing he needs to buy the company.
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Tesla’s stock was trading at about $713 per share on Thursday afternoon, down from over $1,000 in early April.
The investors also claimed that Musk’s public criticism of the firm, including a May 13 tweet saying that the purchase was “temporarily on hold” until Twitter showed that spambots accounted for fewer than 5% of its users, amounted to an attempt to drive down the share price even more.
Musk offered an extra $6.25 billion in equity funding to support his bid for Twitter on Wednesday, indicating that he is still striving to close the purchase.
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