Twitter shareholders filed a lawsuit against the Telsa boss, accusing him of manipulating stock prices prior to his $ 62 billion takeover bid.
Elon Musk faces a lawsuit accusing him of lowering Twitter’s stock price to give himself an escape from its $ 44 billion ($ A62 billion) takeover offer or room to negotiate a discount.
The lawsuit alleges that Tesla’s billionaire boss tweeted and released statements intended to cast doubt on the deal, which rolled the social media platform for weeks.
Filed Wednesday by a shareholder, the application seeks class action status and asks a federal court in San Francisco to uphold the validity of the agreement and grant shareholders any damages permitted by law.
Musk said last week that his offer to buy Twitter won’t proceed unless he gets proof of the number of spam accounts plaguing the platform, adding further uncertainty to his quest for the platform’s rollercoaster.
Musk’s tweet that the Twitter purchase deal was “temporarily suspended” challenged the fact that there is nothing in the purchase agreement that would allow that to happen, the lawsuit said.
Moss negotiated its Twitter purchase in late April without performing the due diligence required in such megadeals, the lawsuit filed by William Heresniak of Virginia said.
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The resulting contract was only to be approved by Twitter’s shareholders and regulators and was to close by October 24 this year, the lawsuit said.
Musk was well aware that some Twitter accounts were controlled by software “bots” rather than real people, and had even tweeted about them before making his offer to buy the company, he argued.
“Musk continued to issue statements, tweet and engage in behavior aimed at creating doubts about the deal and substantially curtail Twitter’s actions,” according to the complaint.
His goal was to get leverage to get Twitter at a much cheaper price, or withdraw from the deal without suffering any penalties, the lawsuit said.
“Musk’s market manipulation has worked: Twitter has lost $ 8 billion ($ 11.2 billion) in valuation terms since the purchase was announced,” the complaint said.
Shares of Twitter closed slightly higher at $ 39.52 ($ A 55.68) on Thursday, as a sign of doubt from investors, the acquisition will be consumed at $ 54.20 ($ A 76.36) for action that Musk had initially offered.
“Musk’s contempt for securities laws demonstrates how one can flaunt the law and the tax code to build one’s wealth at the expense of other Americans,” the court filing said.
Twitter has stated in regulatory documents that it is committed to completing the acquisition without delay at the agreed price and terms.
Musk did not immediately respond to a request for comment sent to Tesla’s press contact email.
Originally published as Elon Musk sued by Twitter shareholders for “market manipulation”