Billionaire Elon Musk was sued by Twitter Inc investors for delaying the disclosure of his stake in the social media company, in a filing Wednesday in California federal court.
At the same time, he celebrated the departure of the company’s founder, Jack Dorsey , from the board of directors with a strong joke on Twitter; in two messages followed by a pause he stated: “Jack off the board…of Twitter!” (which literally means: “Jack off the board…of Twitter, but can also be interpreted in reference to “jack off” as one of the synonyms used to refer to the act of masturbation). Then, to moderate himself, he clarified: “I’m a fan of Jack, but he needs to move on.”
Regarding the lawsuit, investors said Musk saved $156 million by not disclosing that he had bought more than 5% of Twitter before March 14 . He continued to buy shares after that, eventually revealing in early April that he owned 9.2% of the company.
Twitter has lost $8 billion in valuation since the private offering proposal
“By delaying the disclosure of his Twitter holding, Musk manipulated the market and bought Twitter shares at an artificially low price ,” said the investors, led by Virginia-based William Heresniak.
The lawsuit comes after Musk, owner of electric car maker Tesla Inc, announced plans to take over Twitter for $44 billion.
The claim of the South African tycoon to stay with the social network entered swampy ground. Twitter shareholders voted against re-electing Egon Durban, an ally of Elon Musk , as board director at their annual shareholder meeting on May 25.
Since Musk’s offer, Twitter has plunged 22% and its market cap has shrunk to $27.5 billion.
Durban, the co-head of private equity firm Silver Lake, partnered with Musk when he sought to take over Tesla, the electric car maker.
Twitter CEO Parag Agrawal declined to discuss the status of Musk’s takeover bid during his annual shareholder meeting, citing regulatory reasons to remain silent on the matter. “ We are working in the process of transaction”, said Agrawal. “Our teams and I remain focused,” he said.
Also, Musk did not join the meeting and did not tweet about it even though he is active in his comments.
The silent “war” for control of Twitter
The most recent moves by Musk, who is also CEO of SpaceX , could be a strategy to renegotiate the terms of the proposed $44 billion takeover offer by seeking a lower price of $54.20 per share or pulling out of the deal for complete.
Twitter’s board has agreed to the acquisition price and said it remains committed to the deal, according to The Street .
The delay in the negotiations is also a headache for shareholders, since Twitter’s market capitalization has fallen by USD 8 billion since Musk’s offer, although it should be noted that the collapse occurs in a general framework of loss market value of technology companies on Wall Street.
“By delaying the disclosure of his Twitter holding, Musk manipulated the market and bought Twitter shares at an artificially low price,” shareholders complained.
The richest man in the world , Musk, who is also CEO of SpaceX, is now asking the US Securities and Exchange Commission (SEC) which regulates the stock market to investigate Twitter over the number of fake accounts on the platform.
The billionaire has challenged Twitter’s board and management since its takeover bid to take the social media company private on April 14. By May 17, Musk said he wants the company to verify its data on the number of spam accounts and challenged Twitter’s board by saying the acquisition deal is no longer on the table .
“My offer was based on Twitter’s SEC filings being accurate. Yesterday, the CEO of Twitter publicly refused to show proof of <5%. This deal can’t move forward until he does,” Musk said, referring to the fact that less than 5% of Twitter users are bots.
Musk launched a very public campaign to force Twitter’s management and board of directors in an attempt to renegotiate the acquisition price he had proposed. He believes he has achieved his goal and said a lower-priced Twitter deal was not “out of the question.”
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