The swings just keep coming in Elon Musk’s battle for Twitter Inc (NYSE:TWTR). The billionaire is being sued by the company’s investors in California, who accuse him of market manipulation. They allege Musk bought more than 5% of Twitter stock by March 14 and then continued to buy Twitter stock until he ultimately disclosed roughly 9% ownership in April.
As reported by Reuters, investors say the delay in disclosing saved him roughly $150 million because it kept share prices low —Musk will get an opportunity to respond. Meanwhile, the billionaire is putting up an additional $6.25 billion to fund the roughly $44 billion offer to take Twitter private, as revealed yesterday in a regulatory filing.
This means Musk's purchase now includes $33.5 billion in equity, an increase from $27.25 billion. It also means he no longer plans to rely on a margin loan backed by his Tesla Inc (NASDAQ:TSLA) shares.
This is notable as shares of Tesla have tanked about 34% since Musk announced his takeover bid in mid-April. It is also significant because there was speculation about the future of the deal during the third week of May.
Musk publicly requested proof from Twitter that fake accounts make up less than 5% of total users, suggesting the percentage is higher —this casts doubts about the value of the company.
Twitter held its annual shareholder meeting Thursday and avoided the big looming question of whether it is going to complete the $44 billion sale. However, the Twitter CEO said the company continues to work through the transaction.
Also, Reuters reported would not accept Egon Durban's resignation from the board, barely two days after shareholders blocked his re-election at the annual meeting. Durban is an ally of Elon Musk’s deal.
Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh, said: “The Twitter board has not embraced Elon Musk and his vision for Twitter. So the fact that his ally has been removed from the board is not surprising.”
The vote shows shareholders are skeptical of Musk's plan or his disposition to follow through with his initial offer. Still, investors are expected to approve the deal at an upcoming meeting.