A Florida pension fund sued Elon Musk and Twitter Inc on Friday, attempting to prevent Musk from completing his $44 billion buyout of the social media giant until 2025.
The Orlando Police Pension Fund claimed in a proposed class action filed in Delaware Chancery Court that Delaware law prohibited a quick merger because Musk had made agreements with other major Twitter shareholders, including his financial adviser Morgan Stanley and Twitter founder Jack Dorsey, to support the buyout.
According to the fund, these arrangements effectively made Musk, who owns 9.6% of Twitter, the “owner” of more than 15% of the company’s shares. It added that unless two-thirds of shares not “owned” by him approved the merger, it would be postponed for three years.
Morgan Stanley owns 8.8% of Twitter’s stock, while Dorsey owns 2.4 percent.
In one of the world’s largest leveraged buyouts, Musk intends to complete his $54.20 per share Twitter takeover this year.
He is also the world’s richest person, according to Forbes magazine, and runs Tesla Inc, The Boring Company, and SpaceX.
Twitter and its board of directors which includes Dorsey and CEO Parag Agrawal were also named as defendants.
Twitter was unavailable for comment. Musk’s and the Florida fund’s lawyers did not reply to demands for comment right away.
The case also wants restitution for legal fees and costs, as well as a declaration that Twitter directors breached their fiduciary duties. It was unclear how stockholders believed they would be disadvantaged if the deal went through as planned.
Musk announced on Thursday that he has gathered roughly $7 billion in funding for a takeover, including from sovereign wealth funds and Silicon Valley allies.
Musk has no ambitions to buy Twitter when he disclosed his ideas last month.
Musk, a self-described free speech absolutist who might influence how the San Francisco-based business moderates content, appears to share interests with several of the new investors.
Governor Ron DeSantis stated last week that if Musk completes his buyout, Florida’s state pension fund may reap a $15 million to $20 million profit.
Twitter shares were down 60 cents to $49.76 in midday trading.
Orlando Police Pension Fund v Twitter Inc et al No. 2022-0396, Delaware Chancery Court.
