(Reuters) On Friday, a Florida pension fund sued Elon Musk and Twitter Inc (NYSE: TWTR) to delay Musk’s $44 billion purchase of the social media company until 2025.
In a proposed class action filed in Delaware Chancery Court, the Orlando Police Pension Fund asserted that Delaware law prohibited a rapid merger because Musk had agreements with other major Twitter shareholders, including his financial adviser, Morgan Stanley (NYSE: MS), and Twitter founder Jack Dorsey, to support the buyout.
These arrangements, according to the fund, rendered Musk, who owns 9.6% of Twitter, the effective “owner” of more than 15% of the company’s shares. It was said that a three-year wait was necessary unless two-thirds of shares not “owned” by him obtained consent.
Morgan Stanley owns approximately 8.8 percent of Twitter shares, while Dorsey owns 2.4%.
Musk thinks he’ll make one of the world’s biggest leveraged buyouts this year, buying Twitter for $54.20 per share, and he plans to do that.
According to Forbes magazine, he is the wealthiest person in the world. He is also the Chairman and CEO of Tesla (NASDAQ: TSLA), The Boring Company, and SpaceX.
On top of the people named as defendants, Twitter and its board were also on the list.
Twitter was unwilling to comment. Musk and the Florida fund’s attorneys did not reply quickly to demands for comment.
In addition to claiming that Twitter’s directors broke their fiduciary obligations, the complaint seeks to recover legal expenses and costs. It was unclear how stockholders felt they would be affected if the transaction was completed on time.
Musk said on Thursday that he has gathered around $7 billion, including from sovereign wealth funds and Silicon Valley pals, to support a takeover.
Musk did not have financing in place when he revealed his intention to acquire Twitter last month.
People who invested in the San Francisco-based company seem to have some things in common with Musk, a self-described “free speech absolutist.” Musk might change how the company moderates material.
The Florida state pension fund is also invested in Twitter, and Governor Ron DeSantis said this week that it might earn between $15 million and $20 million if Musk’s takeover is successful.
In afternoon trade, Twitter’s stock fell 60 cents to $49.76, a loss of 0.6%.
The case is Orlando Police Pension Fund v. Twitter Inc. et al., No. 2022-0396, Delaware Chancery Court.