(Bloomberg) — Bill Ackman’s Pershing Square is facing a shareholder lawsuit challenging a deal it struck last year with real estate company Howard Hughes Holdings Inc. aimed at eventually creating a business similar to Warren Buffett’s Berkshire Hathaway Inc.

Ackman “coerced and bullied” Howard Hughes directors into an unfair deal that disadvantaged minority investors, according to a proposed class action lawsuit unsealed on Friday in Delaware Chancery Court. The deal was done at an “unfair” price, which gave Pershing Square “operational and managerial” control over the company, the Howard Hughes investors claimed.

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A Pershing Square spokesperson said the lawsuit was “entirely without merit.”

The legal fight is over Pershing Square’s $900 million purchase of newly-issued shares that boosted its stake in Howard Hughes to nearly 47% from about 37% the prior year. As part of the May deal, Howard Hughes agreed to pay Pershing Square a steady stream of quarterly fees and make Ackman executive chairman of its board. The purchase amount represented a 48% premium to the closing share price the previous business day, according to a company release at the time.

Ackman told Bloomberg Television at the time that his aim was to transform Howard Hughes into a Berkshire Hathaway model where the company would take controlling stakes in other public and private businesses. Buffett’s company has benefited from using insurance company holdings to deploy low cost capital into investments. Buffett stepped down as chief executive officer of Berkshire at the end of 2025.

The lawsuit claims that Ackman sent an “unhinged” letter in 2025 when a special committee of Howard Hughes directors pushed back on a deal proposal.

“The committee — and the rest of the board — promptly caved in the face of Ackman’s threats to their seats and reputations,” the investors alleged. The board agreed to a deal that would transfer control of the company to Pershing “without obtaining a control premium for plaintiffs and other minority investors,” attorneys for the plaintiffs wrote.

Ackman and company directors are also listed as defendants.

Ackman’s history with the real estate company traces back to when he became a major investor in General Growth Properties, which spun off Howard Hughes in 2010. Since then, Ackman served as chairman of the company’s board until he stepped down in 2024.