May 6 (Reuters) – Elon Musk and Twitter Inc. (TWTR.N) were sued on Friday by a Florida pension fund seeking to prevent Musk from completing a $ 44 billion takeover of social media company before 2025.
In a proposed class action lawsuit filed with the Delaware Chancellery, the Orlando Police Pension Fund said the Delaware Act prohibits a quick merger because Musk had agreements with other major shareholders on Twitter, including his financial adviser Morgan Stanley (MS). N) and Twitter founder Jack Dorsey to support the buyout.
The fund said the deals made Musk, who owns 9.6 percent of Twitter, de facto “owns” more than 15 percent of the company’s stock. It says it requires a three-year postponement of the merger, unless two-thirds of the shares not “owned” by it approve.
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Morgan Stanley owns about 8.8% of Twitter and Dorsey owns 2.4%.
Musk hopes to complete Twitter’s $ 54.20 takeover per share this year, in one of the world’s largest leverage purchases.
He also runs the electric car company Tesla Inc (TSLA.O), runs The Boring Co and SpaceX, and is the richest man in the world, according to Forbes magazine.
Twitter and its board, including Dorsey and CEO Parag Agraval, have also been named as defendants.
Twitter declined to comment. Lawyers for Musk and the Florida Foundation did not respond immediately to requests for comment.
The lawsuit also aims to declare that Twitter’s directors have violated their confidentiality obligations and to recover court fees and costs. It was not clear how shareholders believe they could be harmed if the merger is completed on schedule.
On Thursday, Musk said he had raised about $ 7 billion, including from government funds and friends in Silicon Valley, to help fund the takeover. Read more
Musk had no funding in place when he announced plans to buy Twitter last month.
Some of the new investors seem to share interests with Musk, a self-described absolutist of free speech who could change the way the San Francisco-based company moderates content.
Florida’s state pension fund is also investing in Twitter, and manager Ron DeSantis said this week that he could make a profit of $ 15 million to $ 20 million if Musk completes his buyout.
Shares of Twitter fell 60 cents to $ 49.76 in the afternoon.
The case is the Orlando Police Pension Fund v. Twitter Inc et al, Delaware Chancery Court, no. 2022-0396.
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Report by Jonathan Stempel in New York Edited by Howard Goller and Mark Potter
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