- Elon Musk and Twitter sued by Florida pension fund seeking to stop Musk from completing his $44 billion takeover before 2025.
- Delaware law forbids quick merger because Musk had agreements with other big Twitter shareholders.
- Musk hopes to complete his $54.20 per share Twitter takeover this year, in one of world’s largest leveraged buyouts.
Elon Musk and Twitter were sued on Friday by a Florida pension fund seeking to stop Musk from completing his $44 billion takeover of the social media company before 2025.
In a proposed class action filed in Delaware Chancery Court, the Orlando Police Pension Fund said Delaware law forbade a quick merger because Musk had agreements with other big Twitter shareholders, including his financial adviser Morgan Stanley and Twitter founder Jack Dorsey, to support the buyout.
The fund said those agreements made Musk, who owns 9.6% of Twitter, the effective “owner” of more than 15% of the company’s shares. It said that required delaying the merger by three years unless two-thirds of shares not “owned” by him granted approval.
Morgan Stanley owns about 8.8% of Twitter shares and Dorsey owns 2.4%.
Musk hopes to complete his $54.20 per share Twitter takeover this year, in one of the world’s largest leveraged buyouts.
He also runs electric car company Tesla, leads The Boring Co and SpaceX, and is the world’s richest person according to Forbes magazine.
Twitter and its board, including Dorsey and Chief Executive Parag Agrawal, were also named as defendants.
Twitter declined to comment. Lawyers for Musk and the Florida fund did not immediately respond to requests for comment.
The lawsuit also seeks to declare that Twitter directors breached their fiduciary duties, and recoup legal fees and costs. It did not make clear how shareholders believed they might be harmed if the merger closed on schedule.
The case is Orlando Police Pension Fund v Twitter Inc et al, Delaware Chancery Court, No. 2022-0396.