May 6 (Reuters) – Elon Musk and Twitter Inc (TWTR.N) A lawsuit was filed Friday by a Florida pension fund seeking to prevent Musk from completing its $44 billion acquisition of the social media company before 2025.
In a class action filed in Delaware Chancery Court, the Orlando Police Retirement Fund said Delaware law prohibits a rapid merger because Musk had agreements with other large Twitter contributors, including his financial advisor Morgan Stanley. (MS.N) and Jack Dorsey, founder of Twitter to support the acquisition.
Those agreements made Musk, who owns 9.6% of Twitter, the de facto “owner” of more than 15% of the company’s shares, the fund said. It said the merger would need to be postponed for three years unless two-thirds of the non-“owned” shares agreed to it.
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Morgan Stanley owns about 8.8% of Twitter stock and Dorsey owns 2.4%.
Musk hopes to complete a $54.20-per-share acquisition of Twitter this year, in one of the world’s largest leveraged acquisitions.
He also runs Tesla Inc. for electric vehicles (TSLA.O)leads The Boring Co and SpaceX, and is the richest person in the world according to Forbes magazine.
Twitter and its board of directors, including Dorsey and CEO Parag Agrawal, have also been named as defendants.
Twitter 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 the Twitter administrators have breached their fiduciary duties, and to recover fees and legal costs. It did not explain how shareholders believed they might be harmed if the merger closed on schedule.
On Thursday, Musk said he had raised about $7 billion, including from sovereign wealth funds and friends in Silicon Valley, to help fund the acquisition. Read more
Musk had no financing when he announced plans to buy Twitter last month.
Some new investors seem to share interests with Musk, who describes himself as a free speech supporter who could change how the San Francisco-based company modifies content.
The Florida State Pension Fund is also investing in Twitter, and Governor Ron DeSantis said this week that he could make a profit of $15-20 million if Musk completes his purchase.
In afternoon trading, Twitter shares were down 60 cents at $49.76.
The case is Orlando Police Retirement Fund v. Twitter Inc et al., Delaware Chancery Court, No. 2022-0396.
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(Reporting by Jonathan Stemple in New York; Editing by Howard Goller and Mark Potter
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