A Florida pension fund has sued Elon Musk and Twitter Inc in an attempt to stop Musk from completing his $44 billion acquisition of the social media company before 2025.
The Orlando Police Pension Fund has launched a proposed class action suit in Delaware Chancery Court, citing Delaware law which forbids a quick merger.
The Orlando Police Pension Fund has argued that since Musk had agreements with big Twitter shareholders, including his financial adviser Morgan Stanley and Twitter founder Jack Dorsey, to support his buyout, these agreements have essentially made Musk, who owns 9.6% of Twitter, the effective “owner” of more than 15% of the company’s shares. Thus, according to Delaware law, the merger should be delayed by three years unless two-thirds of shares not “owned” by him grant approval to the merger.
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.
Musk also runs Tesla Inc, The Boring Co and SpaceX.
The lawsuit has named Twitter and its board, including Dorsey and CEO Parag Agrawal, as defendants.
Twitter declined comment.
Lawyers for Musk and the Florida fund did not immediately respond to requests for comments.
The lawsuit also aims to declare that Twitter directors breached their fiduciary duties, and recoup legal fees and costs, although it did say how such actions may have harmed shareholders if the merger closes on schedule.
According to Florida’s governor Ron DeSantis, Florida’s state pension fund, which has invested in Twitter, could make a profit in the range of $15 million to $20 million if Musk completes his buyout.
The case is Orlando Police Pension Fund v Twitter Inc et al, Delaware Chancery Court, No. 2022-0396.