Musk’s $44 billion Twitter buyout challenged in shareholder lawsuit By Reuters



© Reuters. Elon Musk arrives on the In America: An Anthology of Trend themed Met Gala on the Metropolitan Museum of Artwork in New York Metropolis, New York, U.S., Might 2, 2022. REUTERS/Andrew Kelly

By Jonathan Stempel

(Reuters) – Elon Musk and Twitter Inc (NYSE:) have been sued on Friday by a Florida pension fund in search of to cease Musk from finishing his $44 billion takeover of the social media firm earlier than 2025.

In a proposed class motion filed in Delaware Chancery Courtroom, the Orlando Police Pension Fund mentioned Delaware regulation forbade a fast merger as a result of Musk had agreements with different large Twitter shareholders, together with his monetary adviser Morgan Stanley (NYSE:) and Twitter founder Jack Dorsey, to assist the buyout.

The fund mentioned these agreements made Musk, who owns 9.6% of Twitter, the efficient “proprietor” of greater than 15% of the corporate’s shares. It mentioned that required delaying the merger by three years until two-thirds of shares not “owned” by him granted approval.

Morgan Stanley owns about 8.8% of Twitter shares and Dorsey owns 2.4%.

Musk hopes to finish his $54.20 per share Twitter takeover this yr, in one of many world’s largest leveraged buyouts.

He additionally runs electrical automotive firm Tesla (NASDAQ:) Inc, leads The Boring Co and SpaceX, and is the world’s richest individual based on Forbes journal.

Twitter and its board, together with Dorsey and Chief Government Parag Agrawal, have been additionally named as defendants.

Twitter declined to remark. Attorneys for Musk and the Florida fund didn’t instantly reply to requests for remark.

The lawsuit additionally seeks to declare that Twitter administrators breached their fiduciary duties, and recoup authorized charges and prices. It didn’t clarify how shareholders believed they is perhaps harmed if the merger closed on schedule.

On Thursday, Musk mentioned he had raised round $7 billion, together with from sovereign wealth funds and associates in Silicon Valley, to assist fund a takeover.

Musk had no financing lined up when he introduced plans to purchase Twitter final month.

A few of the new buyers seem to share pursuits with Musk, a self-described free speech absolutist who may change how the San Francisco-based firm moderates content material.

Florida’s state pension fund additionally invests in Twitter, and Governor Ron DeSantis mentioned this week it may make a $15 million to $20 million revenue if Musk accomplished his buyout.

In afternoon buying and selling, Twitter shares have been down 60 cents at $49.76.

The case is Orlando Police Pension Fund v Twitter Inc et al, Delaware Chancery Courtroom, No. 2022-0396.

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