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22 May, 2023

Musk Twitter buyout suit dismissed

Case Dismissed0 Comments

U.S. District Judge Charles Breyer in San Francisco dismisses a class-action lawsuit against Musk which accused him of cheating Twitter shareholders in the course of buying the company. (Heresniak v Musk et al, U.S. District Court, Northern District of California, No. 22-03074)

According to the judge, the plaintiff lacked standing to sue because he challenged “wrongs associated with” Musk’s buyout, not the fairness of the buyout itself. Further, the judge says the plaintiff failed to show harm from Musk’s belated disclosure of a 9.2% Twitter stake (which the suit said let him buy more shares at lower prices before the buyout was announced) or from the late closing of the deal. The judge also finds no proof that Musk helped Dorsey and Silver Lake private equity firm managing partner Egon Durban breach their fiduciary duties by favoring their own and Musk’s interests – letting Dorsey roll his Twitter shares into an equity stake in the new company merely reduced the amount Musk paid at closing, it did not “improperly divert” money from other shareholders.

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