Trial Examines Elon Musk’s 2022 Attempt to Abandon Twitter Deal

The case centers on claims that Musk, now the world’s richest person, deliberately undermined Twitter’s market value after agreeing to acquire the social media platform for $44 billion. He ultimately completed the purchase in the fall of 2022, paying the originally agreed $54.20 per share, according to Bloomberg. However, shareholders contend that the months between the initial agreement and the closing were marked by public statements that drove down the stock price and harmed investors.

According to Bloomberg, the trial will revisit the six-month stretch in 2022 when Musk oscillated between pursuing what was characterized as a hostile takeover, attempting to withdraw from the transaction, and eventually closing the deal after Twitter sued him to enforce the merger agreement.

At the heart of the investors’ case are Musk’s public remarks in May 2022 announcing that the acquisition was “temporarily on hold.” He cited concerns about the company’s estimates of spam and fake accounts on the platform. Following that announcement, Twitter shares fell nearly 20% in premarket trading and ended the day down about 10%, per Bloomberg. The stock continued to fluctuate sharply in the ensuing months as uncertainty over the transaction persisted.

Read more: Musk Seeks Dismissal of SEC Lawsuit Over Twitter Stake Disclosure

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Musk is expected to testify and will likely be a central figure in proceedings that also examine his history of using social media to communicate market-moving information. The investors’ legal team faces the challenge of proving that Musk intended to depress Twitter’s share price for his own benefit.

“Showing the intent behind Mr. Musk’s statements is one of the main hills the plaintiffs in this case must climb to win,” Kevin Haeberle, a law professor at the University of California-Irvine, said in an interview. “It’s not easy, but it’s not an insurmountable barrier.”

Musk has denied any wrongdoing and maintains that he did not seek to mislead investors.

The trial also draws renewed attention to Musk’s past legal clashes tied to his social media activity. In 2018, he reached a settlement with the Securities and Exchange Commission after the regulator accused him of securities fraud over a tweet claiming he had “funding secured” to take Tesla Inc. private, according to Bloomberg. As part of that agreement, Musk consented to having certain company-related social media posts pre-approved by an internal attorney.

Musk later sought to overturn that arrangement, often referred to as the “Twitter Sitter” provision, but the US Supreme Court declined to intervene, according to Bloomberg.

He has also prevailed in other high-profile legal disputes. In 2023, a San Francisco jury cleared him in a lawsuit brought by Tesla investors over the same “funding secured” tweet, reaching a verdict after just two hours of deliberations, per Bloomberg. In 2022, he successfully defended against claims in Delaware that Tesla’s acquisition of SolarCity Corp. amounted to an improper bailout of a struggling company founded by his relatives, avoiding potential damages estimated at $2 billion.

Given his track record in courtroom battles, Musk has earned the nickname “Teflon” Elon. Whether that reputation endures may depend on the outcome of the latest trial, which once again places his tweets and business tactics under judicial scrutiny.

Source: Bloomberg