Elon Musk offers to buy Twitter; investors sue after his earlier stake purchase

Tesla boss and world's richest man Elon Musk has offered to buy Twitter, saying he is the right person to "unlock" the social media platform's "extraordinary potential".

Musk started to acquire shares of Twitter beginning in January.
Musk started to acquire shares of Twitter beginning in January. Photo courtesy: Twitter/@elonmusk

In a surprise announcement, Musk said he would pay USD 54.20 a share for Twitter, valuing it at about USD 40 billion.

Musk recently purchased a large stake in the firm, making him Twitter's biggest shareholder.

He said that if his offer was not accepted, "I would need to reconsider my position as a shareholder".

Musk also said that if the board of directors at Twitter chose to reject the offer, it would be "utterly indefensible not to put this offer to a shareholder vote".

"They own the company, not the board of directors," he tweeted.

Musk has been sued by Twitter investors for reportedly being late in notifying financial regulators about his acquisition.

They claim that Musk’s omission saved him roughly USD 143 million, while they missed out on significant profits when Twitter shares skyrocketed in light of the news

“Defendant had the obligation, ability, and opportunity to prevent the issuance of the false statements and omissions alleged herein,” reads the proposed class action filed in New York federal court. 

“Because of his position as a 5% owner in Twitter, and access to material non-public information available to himself but not to the public, Defendant Musk knew that the adverse facts specified herein had not been disclosed to and were being concealed from the public and that the omissions being made were false and misleading.”

Musk started to acquire shares of Twitter beginning in January. Three months later, he had acquired more than a 5 per cent ownership stake.

Under the Securities Exchange Act, Musk was required to notify the financial regulators within 10 days of passing that threshold, the lawsuit says.

Musk instead continued to amass Twitter shares. He waited until April 4, after acquiring 9.1 per cent of the company, before filing the required disclosures.

Twitter's stock price surged at the news of his purchases. Its shares rose from USD 39.31 on April 1 to USD 49.97 when Musk disclosed his newest purchase to the Securities and Exchange Commission — an increase of roughly 27 per cent.

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