When companies try to buy another company, they don’t just pay the asking price. Obviously there’s a lot of bargaining and negotiation to drive the price down and to find more favorable compromises. But maybe Elon Musk might have gone too far, with a jury finding him guilty of defrauding Twitter investors when he tried to buy the company all those years ago.
Elon Musk found guilty of defrauding Twitter investors
According to a recent report from Bloomberg, the jury in a federal court in San Francisco found Elon Musk guilty of defrauding Twitter investors. In case you forgot, Musk made a bold callout in 2022 to buy Twitter (now known as X). It was an unsolicited attempt, but it quickly turned serious.
Musk said he would buy the company for $54.20 a share, which was surprising. This is because at that time, Twitter’s market cap was $36 billion. Musk’s offer would have valued the company at around $44 billion. For a moment, it felt like it was almost a done deal. However, Musk publicly had a slight change of mind.
He initially attempted to back out of his initial offer. He claimed that Twitter has apparently underreported the number of bots on the platform. This meant that the number of actual human users could be fewer than advertised. In the end, Musk did buy Twitter after the company sued him to enforce the agreement.
On the surface, it might seem like Musk had a change of heart. After all, sometimes we almost pull the trigger on buying something but change our minds at the last minute. It’s normal, right? However, it seems that might not have been the case here. According to Twitter’s investors, they believe that Musk had publicly disparaged the company in an attempt to drive its stock price down. In July 2022, those prices reached $32.52. That’s 40% less than what Musk initially offered.
Musk plans to appeal
Unsurprisingly, a report from the Wall Street Journal has confirmed that Musk plans to appeal. In a statement issued by his legal team, they say, “We view today’s verdict, where the jury found both for and against the plaintiffs and found no fraud scheme, as a bump in the road, and we look forward to vindication on appeal.”
However, if the appeal fails, Musk could be on the hook for millions, if not billions, of dollars. The amount of damages has yet to be determined, as it will require that shareholders submit their claims. But since this will be calculated on how much his statements drove the price down each trading day over a period of five months, it could add up to be a hefty sum. But then again, he is the world’s richest man.
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