Twitter’s shareholders have sued serial entrepreneur Elon Musk over his “illegal” takeover bid.
Investors said that Musk’s decision to put on hold his initial $44bn bid brought Twitter’s value down, allowing him to either walk away from the deal or negotiate a lower price.
The billionaire initially announced his intention to buy Twitter in late April for $44bn but after a couple of weeks he put the deal on hold, claiming he needed more information about the percentage of fake accounts on the platform.
Despite Twitter’s reassurances, Musk argued the takeover price should be renegotiated if the percentage of bots was higher than 5 per cent.
According to the lawsuit, Musk broke the law as he violated the non-disparagement and non-disclosure agreements of his contract, Sky News reported.
“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 US lawsuit read.
Shareholders also accused him of failing to disclose on time his 9 per cent stake in the company to the US Securities and Exchange Commission (SEC).
“By delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price,” the legal action said.
Twitter’s share price jumped to $51.70 following the news of the takeover but slumped after Musk put the deal on hold.