Elon Musk to testify in shareholder lawsuit over Twitter takeover

Billionaire entrepreneur Elon Musk is expected to take the witness stand on Wednesday in a shareholder trial in San Francisco over making false and misleading public statements that allegedly depressed Twitter’s share price ahead of his $44 billion acquisition in 2022.

The lawsuit, filed in October 2022 at the U.S. District Court for the Northern District of California, was brought on behalf of Twitter shareholders who sold their shares between May 13 and October 4, 2022 weeks before the transaction was completed.

Plaintiffs allege that Musk violated federal securities laws by making statements designed to undermine market confidence in Twitter, thereby pushing down its stock price.

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**What they are saying **

Musk, who is also the chief executive of Tesla, agreed in April 2022 to acquire Twitter and take the company private at $54.20 per share.

However, on May 13, he announced that the deal is “on hold temporarily” due to the number of spam and fake accounts on the platform.

• Twitter shares dropped on the news statement. Several days later, Musk tweeted that the deal “cannot go forward” in a further escalation of the dispute, claiming that nearly 20% of Twitter accounts were fake, far above the company’s public estimate of less than 5%.

The suit alleges that, contrary to Musk’s statements, Twitter had not consented to an indefinite pause on the transaction, nor did the merger agreement grant Musk the right to do so.

• “To try to renegotiate the price or delay the merger, Musk made materially false and misleading statements and omissions,” the lawsuit claims.

The plaintiffs argue that Musk continued to publish disparaging remarks about Twitter’s business in the following weeks as part of a broader effort to delay or renegotiate the acquisition. In July 2022, Musk said he was walking away from the deal, alleging that Twitter had failed to provide sufficient information on fake accounts.

The lawsuit notes that Musk had waived due diligence as part of his “take it or leave it” offer, meaning he relinquished the right to review nonpublic information before finalizing the agreement.

At the time Musk announced his intention to abandon the deal, Twitter shares closed at $36.81, about 32% below the agreed offer price.

The issue of bots was not new to Twitter. The company had previously paid $809.5 million in 2021 to settle claims related to overstating user growth and had regularly disclosed bot estimates to regulators, while cautioning that such figures were subject to limitations.

**What you should know **

On May 27, 2022 Twitter ultimately sued Musk to compel him to complete the acquisition.

On October 4, 2022, Musk reversed course and agreed to proceed with the original $44 billion deal, which closed later that month. Since then, he has restructured the company, reduced its workforce, eased content moderation policies, and rebranded the platform as X.

• This is not Musk’s first high-profile courtroom appearance. In 2023, he was cleared by a jury in a separate case involving allegations that his social media posts misled investors during a failed 2018 attempt to take Tesla private.
• In November 2024, Europe’s wealthiest individual, Bernard Arnault, head of luxury conglomerate LVMH, filed a lawsuit against Elon Musk’s social media platform X for allegedly using his newspapers’ content without compensation.
• The lawsuit involved two of Arnault’s newspapers, Le Parisien and Les Echos, alongside other French dailies Le Figaro and Le Monde.

The publishers claim that X has disregarded a 2019 European Union directive mandating digital platforms to pay for news content. Under this directive, digital platforms were required to negotiate and compensate media publishers for reusing their content.

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