ELON Musk faces a suit accusing him of pushing down Twitter’s stock price to either give himself an escape hatch from his US$44 billion (RM192 billion) buyout bid or room to negotiate a discount.

The suit alleges the billionaire tweeted and made statements intended to create doubt about the deal, which roiled the social media platform for weeks.

The suit, filed by a shareholder on Wednesday, seeks class action status and calls on a Federal Court in San Francisco to back the validity of the deal and award shareholders any damages allowed by law.

Musk last week said his bid to buy Twitter will not proceed unless he gets proof of the number of spam accounts plaguing the platform, adding more uncertainty to his roller-coaster pursuit of the platform.

Musk’s tweet that the deal to buy Twitter is “temporarily on hold” defied the fact that there is nothing in the purchase contract allowing that to happen, argued the suit.

Musk negotiated his Twitter buyout in late April without carrying out due diligence expected in such megadeals, said the suit filed by William Heresniak of Virginia.

The resulting contract needed only to be approved by shareholders and regulators, and was to close by October 24, it added.

Musk is well aware that some accounts are controlled by software “bots” rather than real people, and even tweeted about it prior to making his offer to buy the company, argued the suit.

“Musk proceeded to make statements, tweet and engage in conduct designed to create doubt about the deal and drive Twitter’s stock down substantially.”

His aim is to gain leverage to get Twitter at a much cheaper price or back out of the deal without suffering any penalty, said the suit.

“Musk’s market manipulation worked – Twitter lost US$8 billion in valuation since the buyout was announced.”

Twitter shares closed slightly up at US$39.52 yesterday, in a sign of investor doubt the buyout will be consummated at the US$54.20 per share that Musk originally bid.

“Musk’s disregard for securities laws demonstrates how one can flaunt the law and tax code to build their wealth at the expense of other Americans,” said the court filing.

Twitter, in regulatory filings, said it is committed to completing the takeover at the agreed price and terms without delay.

Musk did not immediately reply to a request for comment. – AFP, May 27, 2022.