🎙️ Voice is AI-generated. Inconsistencies may occur.
Elon Musk made global headlines a few weeks ago when he announced his attempt to purchase social media giant Twitter for a total sum of $44 billion.
On April 25, the company's board of directors accepted Elon Musks's offer, which equals $54.20 per share, and a more than 30 percent premium to Twitter's April 1 closing stock price.
This was the same price of his initial offer on April 14.
Once the transaction is complete, and Musk is the sole owner of the company, Twitter will officially become a private entity.
Yet it appears the world's richest man is once again making the headline news (when is he not)—but this time it's all down to a legal dispute with Twitter shareholders, who are suing him.
Why Are Twitter Shareholders Suing Elon Musk?
They are suing him over claims that he was allegedly manipulating the stock by deliberately delaying disclosure of his stake in the social media platform.
The company claims that by doing so, he has saved himself $156 million, as he had purchased more than five percent of Twitter by March 14.
Musk offered to buy the company on April 14 2022, but a few weeks later he put this deal on hold.
The investors have further claimed that the most recent drop in Tesla's stock is a serious concern, as it questions Musk's ability to finance his purchase of Twitter. In fact, it puts it "major peril" as he guaranteed he would put his Tesla shares as an insurance/collateral to get the loans he required to purchase the company.
This drop in Tesla's stock occurred in the past month, as they were being traded for around $700 on Thursday, May 26. This is a $300 dollar drop, as the stock was originally trading for $1,000 in early April.
Twitter shareholders are concerned that the entrepreneur is attempting to lower the platform's stock value, so that he can negotiate a lower price.
The lawsuit states that "by delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price."
The shareholders are accusing Musk of lowering the value of the social media platform, which is a violation of both the non-disparagement and non-disclosure clauses in his contract with Twitter.
On May 13, Newsweek reported that Musk's acquisition of Twitter was on hold, due to concern over the level of fake accounts.
Musk said in a tweet at the time: "Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than five percent of users."
What Happens Next?
Musk's delay in disclosing his stake had now triggered an intervention by the U.S. Securities and Exchange Commission (SEC), according to a Wall Street Journal report released earlier this month.
In mid April, Musk filed an amended Twitter holdings report with SEC, stipulating that he "may express his views to the Board and/or members of the Issuer's management team and/or the public through social media or other channels with respect to the Issuer's business, products and service offerings."
The news came after Twitter CEO Parag Agrawal said Musk had decided he will not be joining Twitter's board, despite saying previously he planned to do so.
Newsweek has contacted Musk for comment, but neither himself nor his lawyer have so far responded.
Twitter has also declined to comment on the situation.
