Elon Musk and Twitter have been sued this Friday by a Florida pension fund that seeks to prevent the founder of Tesla from completing the acquisition of the social network for 44,000 million dollars before 2025.
In a lawsuit filed in Delaware Chancery Court, the Orlando police pension fund said Delaware law prohibits a quick buyout because Musk had deals with other big Twitter shareholders, including his financial adviser Morgan Stanley and the founder of the social network Jack Dorsey, to support the purchase.
The fund said those deals made Musk, who owns 9.6% of Twitter, the beneficial “owner” of more than 15% of the company’s shares. And he said the takeover needed to be delayed for three years unless two-thirds of the shares he didn’t own gave their approval.
Morgan Stanley owns about 8.8% of Twitter shares and Dorsey 2.4%. Musk, who also runs Tesla, The Boring Co and SpaceX and is the richest person in the world according to Forbes magazine, has offered $54.20 per share of the social network, and hopes to complete the purchase this year, in one of the largest leveraged buyouts in the world.
Twitter and its board of directors, including Dorsey and CEO Parag Agrawal, have also been sued.
The social network declined to comment. Lawyers for Musk and the Florida fund did not immediately respond to requests for comment.
The lawsuit also seeks to declare that Twitter’s directors breached their fiduciary duties, and to recover legal fees and costs. It does not make clear how they think shareholders could be hurt if the merger closes on schedule.
Yesterday, Musk revealed that he had raised 7,140 million dollars (about 6.750 million euros) from 19 investors, including sovereign wealth funds and friendly Silicon Valley investors, to help finance an acquisition. The Tesla founder didn’t have any funding lined up when he announced his plans to buy Twitter last month.
Some of the new investors, including Oracle founder and majority shareholder Larry Ellison, appear to share interests with Musk, a self-described free speech absolutist who could change the way Twitter moderates content.
Florida’s state pension fund also invests in Twitter, and Governor Ron DeSantis said this week that he could make $15 million to $20 million in profit if Musk completes his purchase.
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