Might 6 (Reuters) – Elon Musk and Twitter Inc (TWTR.N) had been sued on Friday by a Florida pension fund looking for to cease Musk from finishing his $44 billion takeover of the social media firm earlier than 2025.
In a proposed class motion filed in Delaware Chancery Court docket, the Orlando Police Pension Fund stated Delaware regulation forbade a fast merger as a result of Musk had agreements with different large Twitter shareholders, together with his monetary adviser Morgan Stanley (MS.N) and Twitter founder Jack Dorsey, to assist the buyout.
The fund stated these agreements made Musk, who owns 9.6% of Twitter, the efficient “proprietor” of greater than 15% of the corporate’s shares. It stated that required delaying the merger by three years until two-thirds of shares not “owned” by him granted approval.
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Morgan Stanley owns about 8.8% of Twitter shares and Dorsey owns 2.4%.
Musk hopes to finish his $54.20 per share Twitter takeover this 12 months, in one of many world’s largest leveraged buyouts.
He additionally runs electrical automobile firm Tesla Inc (TSLA.O), leads The Boring Co and SpaceX, and is the world’s richest particular person based on Forbes journal.
Twitter and its board, together with Dorsey and Chief Government Parag Agrawal, had been additionally named as defendants.
Twitter declined to remark. Legal professionals for Musk and the Florida fund didn’t instantly reply to requests for remark.
The lawsuit additionally seeks to declare that Twitter administrators breached their fiduciary duties, and recoup authorized charges and prices. It didn’t clarify how shareholders believed they may be harmed if the merger closed on schedule.
On Thursday, Musk stated he had raised round $7 billion, together with from sovereign wealth funds and pals in Silicon Valley, to assist fund a takeover. learn extra
Musk had no financing lined up when he introduced plans to purchase Twitter final month.
A few of the new traders seem to share pursuits with Musk, a self-described free speech absolutist who may change how the San Francisco-based firm moderates content material.
Florida’s state pension fund additionally invests in Twitter, and Governor Ron DeSantis stated this week it may make a $15 million to $20 million revenue if Musk accomplished his buyout.
In afternoon buying and selling, Twitter shares had been down 60 cents at $49.76.
The case is Orlando Police Pension Fund v Twitter Inc et al, Delaware Chancery Court docket, No. 2022-0396.
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Reporting by Jonathan Stempel in New York
Modifying by Howard Goller and Mark Potter
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