Musk Denies Misconduct Allegations Before Acquiring Twitter
Elon Musk appeared in court in San Francisco, defending himself against allegations of deceptive behavior. These claims suggest he misled investors as he tried to distance himself from a $44 billion deal to acquire Twitter, which he later rebranded as X. The civil trial is based on a class-action lawsuit filed shortly before Musk finalized the takeover in October 2022.
Musk’s Acquisition of Twitter
Musk agreed to purchase Twitter for $54.20 per share in April 2022. The acquisition price amounted to $44 billion, a small fraction of Musk’s estimated fortune of $841 billion. The lawsuit focuses on shareholders who sold their stocks between May 13 and October 4, 2022, alleging Musk violated federal securities laws.
Allegations of Misleading Conduct
The allegations center on Musk’s purported efforts to manipulate Twitter’s stock price. While he argued for renegotiation, Musk claimed the board deceived him regarding the proportion of “bot” accounts on the platform. During his testimony, he stated, “I was pretty upset with the Twitter board because I felt they had engaged in fraud.”
- Musk suggested he might have threatened Twitter’s board regarding negotiations.
- He faced accusations of making misleading statements before attempting to back out of the deal.
- Twitter had previously settled claims of overstating user growth in 2021 for $809.5 million.
Legal Proceedings and Outcomes
After Musk attempted to withdraw from the deal, Twitter sought legal action in Delaware. Musk reversed his decision before the case went to trial, citing his lawyers’ advice regarding a potentially biased judge, Chancellor Kathleen St. Jude McCormick. Musk claimed her potential bias influenced his decision to proceed with the acquisition.
The judge’s previous decision to void a lucrative $55 billion pay package awarded to Musk raised concerns regarding his legal standing. U.S. District Judge Charles Breyer acknowledged evidence that Musk may have personally deemed the judge biased, a consideration that could alter attorney-client privilege rules.
Stock Impact and Future Proceedings
During the time the deal was uncertain, Twitter’s shares dropped to about $33, approximately 40% below the originally agreed price. Musk asserted that most Twitter shareholders ultimately benefitted once the deal was completed.
- Musk stated, “I can’t control whether people sell their stock, but everyone who held the stock fared extremely well.”
No stranger to legal challenges, Musk faced similar allegations three years ago about misleading investors during his bid to take Tesla private. In that instance, a jury found him not liable.
As proceedings continue, Musk is expected to return to court for additional testimony, reaffirming his commitment to addressing the allegations made against him. El-Balad will provide updates on this unfolding story.
