Washington: Twitter shareholders have filed a class action lawsuit against Elon Musk and Twitter Inc. for dragging the acquisition process, which has led to major fluctuations in stock prices, US media reported on Friday.
In the lawsuit filed on Wednesday, Twitter shareholders accused Musk of breaching California corporate law and manipulating the market. They also contend that Musk violated state law by casting doubt about whether he intends to complete the deal after signing the contract, CNBC broadcaster said.
Musk reached an agreement with Twitter on the acquisition of the social network for $54.20 per share in a deal valued at approximately $44 billion on April 25. However, in mid-May, Musk announced suspending the acquisition process, intending to reveal whether spam and fake accounts in Twitter account for less than 5%. That announcement drove Twitter’s shares to collapse by 20%.
“Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubt about the deal and drive Twitter’s stock down substantially in order to create leverage that Musk hoped to use to either back out of the purchase or to re-negotiate the buyout price by as much as 25% which, if accomplished, would result in an $11 billion reduction in the Buyout consideration,” according to the lawsuit cited by CNBC.
Under California state law, corporations must suspend board members from voting on proposals if they have committed any misconduct related to those proposals, the report added.
So far, neither Musk nor Twitter have commented on the news.