A California jury has ruled that Elon Musk stitched up Twitter shareholders by publicly claiming the deal was on hold and then pressing ahead when the share price dropped.
Jurors in San Francisco on Friday sided with investors who sued the billionaire, saying they were burned by Musk’s “misleading statements” in April 2022 during his takeover run.
It is a public legal slap for the world’s richest man, with damages still to be determined.
The federal class action focused on tweets Musk fired off in April 2022, weeks after he agreed to buy the social media outfit for $44bn.
X owner Elon Musk wrote the deal was “temporarily on hold” until Twitter executives could demonstrate that “spam/fake accounts do indeed represent less than 5% of users”.
Twitter stock slid into the low $30s from a deal price of $54.20 a share as investors priced in the chance the whole thing would collapse.
Musk posted that the deal “cannot move forward” until Twitter’s chief executive shows proof that less than five per cent of accounts were “fake/spam”.
The investors said they dumped Twitter shares after the posts and took the hit as the price sank.
The acquisition still closed later in 2022 at the original price after the Twitter board sued Musk in Delaware to enforce the merger agreement.
The plaintiffs argued Musk had signed a binding deal and waived due diligence, so he should have known he could not just stroll away.
They said his “on hold” tweet was false because Twitter had not agreed to delay anything, while their lawyers claimed his bankers pushed a plan to shave the purchase price.
Jurors did not go so far as to back claims that Musk ran a fraudulent “scheme” against shareholders.
The trial ran for weeks in San Francisco, with testimony from Musk, former Twitter executives, board members and the bankers and lawyers who haggled over the transaction.
Musk told the court he thought inflated user figures gave him grounds to walk, adding, “It may not have been my wisest tweet. I am not sure I would call it incredibly stupid… but if it led to this trial, it probably qualifies.”
He has since ripped Twitter apart and rebuilt it as X, sacking thousands, merging it with his AI start-up xAI and then rolling the lot into his rocket outfit SpaceX.
