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Twitter shareholders are suing Elon Musk, accusing him of acting illegally in the way he has handled his takeover bid.
They claim the billionaire has tried to bring down the platform’s stock value because he wants to walk away from the deal or negotiate a much lower price.
Last month Musk offered to buy the company for $44bn but later put the deal on hold until the company provides more information about how many accounts on the platform are spambots.
He has since said he thinks he should pay less if more than 5% of accounts turn out to be fake.
However, the US lawsuit says he waived due diligence when he made the offer, which means he lost the right to look into the company’s non-public finances.
Shareholders have accused Musk of denigrating Twitter, violating both the non-disparagement and non-disclosure clauses of his contract with the company.
“In doing so, Musk hoped to drive down Twitter’s stock price and then use that as a pretext to attempt to re-negotiate the buyout,” the lawsuit says.
Tesla shares spiked after Musk announced his 9% stake in Twitter and later made his initial offer to buy the company – but subsequently fell as his comments sowed doubt about whether the deal would go through.
Twitter’s shares closed on Thursday at $39.54, below Musk’s offer of $52.40 per share.
The lawsuit also alleges he did not disclose his 9% stake in the company within the timeframe required by the Securities and Exchange Commission.
Twitter investors claim he saved more than $156m by failing to disclose his stake on time, since an earlier disclosure could have pushed up share prices.
“By delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price,” the lawsuit says.
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In Wednesday’s suit, the investors asked to be certified as a class and to be awarded an unspecified amount of punitive and compensatory damages
Neither Musk nor his lawyer immediately responded to requests for comment. Twitter declined to comment.
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