Elon Musk has been hit by a lawsuit from a Twitter shareholder who accuses the Tesla boss of criticizing the company he has agreed to buy and then doubts the agreement to reduce Twitter’s value.
The proposed class action lawsuit, filed Wednesday in the U.S. District Court for the Northern District of California, claims Musk intended to push down Twitter’s stock price because he either wants to deviate from the agreement or negotiate a lower purchase price.
The case, which also names Twitter, claims that Musk’s attack violated both the non-derogatory and non-disclosure clause in his contract with the company.
Musk continued to make statements, send tweets and engage in behavior designed to create doubt about the deal and bring down Twitter̵[ads1]7;s shares significantly to create influence that Musk hoped to use to either withdraw from the purchase or to renegotiate purchase price by as much as 25%, which, if achieved, will result in a reduction of 11 billion dollars in the purchase consideration, it is stated in the case.
“Musk’s conduct was and continues to be unlawful, in violation of the California Corporation Code, and in violation of the contractual terms he agreed to in the agreement,” the lawsuit adds.
Musk entered into an agreement last month to buy the social media company for $ 44 billion, but has since repeatedly publicly complained on Twitter. In particular, he has challenged the number of robots or spam accounts, which Twitter has stated make up less than 5% of the accounts. Musk speculated wildly at a technology conference earlier this month that the percentage of fake accounts could be as high as 95%.
He also announced that he put the purchase on “hold”, although he insisted that he was still “committed” to the agreement. He later said that a lower purchase price was not ruled out.
Since Musk’s takeover bid – and cloudy – Twitter’s share price has fallen more than 12%, and Tesla’s down around 28%.
Twitter shares closed at $ 39.54 on Thursday – 27% below Musk’s offer of $ 54.20 per share to buy the company.
Musk used Tesla shares to fund the Twitter purchase. But he has since increased his personal financing by more than $ 6 billion and secured an additional $ 6.25 billion in equity financing, according to regulatory records on Wednesday.
The lawsuit also accuses Musk of insider trading by buying shares while talking to the company’s board members, and for failing to meet a statutory deadline to inform the Securities and Exchange Commission that he had bought a 5% stake in the company. The SEC has sent a letter to Musk demanding an explanation that the deadline be exceeded.
Musk could not be reached for comment, and he has not commented on the lawsuit.