Elon Musk has been hit by a lawsuit from a Twitter shareholder accusing Tesla’s CEO of criticizing the company he agreed to buy and raising doubts about the deal in order to reduce the value of Twitter.
The proposed class action, filed Wednesday in the U.S. District Court for the Northern District of California, states that Musk intended to reduce the price of Twitter shares because he wants to move away from the deal or negotiate a price of buy lower.
The lawsuit, which also calls for Twitter, argues that Musk’s attacks violated both the non-contempt and non-disclosure clauses of his contract with the company.
“Musk proceeded to make statements, send tweets and engage in conduct designed to raise doubts about the deal and substantially reduce Twitter’s actions in order to create a leverage that Musk hoped to use to withdraw from the purchase or return to negotiate the purchase price by up to 25%, which, if achieved, would result in a $ 11 billion reduction in the purchase consideration, ”the lawsuit states.
“Musk’s conduct was and continues to be illegal, in violation of the California Corporate Code and contrary to the contractual terms he accepted in the agreement,” the lawsuit adds.
Musk made a deal last month to buy the social media company for $ 44 billion, but has since repeatedly complained publicly on Twitter. In particular, it has questioned the number of bots or spam accounts, which Twitter has claimed are less than 5% of accounts. Musk speculated at a technology conference earlier this month that the fake account rate could reach 95%.
He also announced that he was “waiting” for the purchase, although he insisted that he was still “committed” to the deal. He later said a lower purchase price was not in doubt.
Since Musk’s takeover bid – and complaints – Twitter’s share price has dropped more than 12% and Tesla’s has dropped 28%.
Shares of Twitter closed at $ 39.54 on Thursday, 27 percent below Musk’s $ 54.20 per share bid to buy the company.
Musk used Tesla shares to fund the purchase of Twitter. But it has since increased its personal funding by more than $ 6 billion and secured an additional $ 6.25 billion in equity funding, according to regulatory documents on Wednesday.
The lawsuit also alleges Musk’s insider dealing by buying shares while talking to board members and failing to meet the legally required deadline to report to the Securities and Exchange Commission that it had acquired a stake. 5% to the company. The SEC has sent a letter to Musk demanding an explanation for failing to meet the deadline.
Musk could not be reached for comment and has not issued a statement on the lawsuit.