BY CHARLES ABUEDE
A Florida based pension fund has in a lawsuit sued Elon Musk and Twitter Inc. in a bid seeking to stop Musk from completing his $44 billion takeover of the social media company before 2025.
This is coming after the announcement by the man who runs the electric car company Tesla Inc., leads The Boring Co and SpaceX, and is the world’s richest person according to Forbes magazine, to acquire the American microblogging social media network.
The lawsuit seeks to delay the merger’s closing until at least 2025, as it also declares that Twitter directors breached their fiduciary duties, and recoup legal fees and costs on the deal. The case is Orlando Police Pension Fund v Twitter Inc. et al, Delaware Chancery Court, No. 2022-0396.
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 (MS) and Jack Dorsey, Twitter founder to support the buyout. It also said those agreements made Elon Musk, who owns 9.6 percent of Twitter shares, the effective “owner” of more than 15 percent of the company’s shares, requiring a three-year delay in the merger unless two-thirds of shares not “owned” by him grant approval.
In the filing, Twitter and its board, including Dorsey and Parag Agrawal, Twitter’s chief executive, were also named as defendants as it was not immediately clear from the lawsuit how Twitter shareholders might be harmed absent a three-year delay. However, Twitter has declined to comment on the issue in the same vein as Musk’s lawyer.
The proposed takeover of Twitter by Musk would be one of the largest leveraged buyouts ever. More revelation from Musk came on Thursday when it was revealed that he had no financing support lined up when he announced the bids to acquire the social network last month but until now, he has raised around $7 billion, including from sovereign wealth funds and friends in Silicon Valley, to help fund a takeover.