A Florida pension fund sued Elon Musk and Twitter Inc (TWTR.N) on Friday, attempting to prevent Musk from completing his $44 billion buyouts of the social media giant until 2025.
The Orlando Police Pension Fund claimed in a proposed class action filed in Delaware Chancery Court that Delaware law prohibited a quick merger because Musk had agreements with other major Twitter shareholders, which include his financial adviser Morgan Stanley (MS.N) and Twitter founder Jack Dorsey, to support the buyout.
According to the fund, the agreements made Musk, who owns 9.6 percent of Twitter, the effective “owner” of more than 15% of the company’s shares. It stated that unless two-thirds of the shares not “owned” by him received consent, the merger would be delayed for three years.
Morgan Stanley owns approximately 8.8 percent of Twitter stock, whereas Dorsey owns 2.4 percent.
Musk aims to complete his $54.20 per share takeover of Twitter this year, making it one of the world’s largest leveraged buyouts.
He also runs Tesla Inc (TSLA.O), The Boring Company, and SpaceX, and is the world’s richest individual, according to Forbes magazine.
Twitter and its board of directors, including Dorsey and CEO Parag Agrawal, were also named as defendants. Twitter did not respond. Musk’s and the Florida fund’s lawyers did not immediately reply to demands for comment.
The action also seeks a declaration that Twitter directors broke their fiduciary duties, as well as reimbursement for legal fees and costs. It did not specify how shareholders believed they would be disadvantaged if the deal went ahead as planned.
Musk announced on Thursday that he has gathered approximately $7 billion in funding for a takeover, including from sovereign wealth funds and Silicon Valley allies.
Musk declared his plans to buy Twitter last month with no money in place.
Some of the new investors appear to have similar interests as Musk, a self-described free speech absolutist who has the potential to modify how the San Francisco-based firm moderates content.
Florida’s state pension system also invested in Twitter, and Governor Ron DeSantis indicated this week that if Musk completes his takeover, it might profit $15 million to $20 million.
Twitter shares were down 60 cents to $49.76 in midday trading.
The case is Orlando Police Pension Fund v Twitter Inc et al, No. 2022-0396 in the Delaware Chancery Court.
