Musk’s $ 44 billion Twitter acquisition challenged in shareholder lawsuits

May 6 (Reuters) – Elon Musk and Twitter Inc (TWTR.N) were sued on Friday by a Florida pension fund that tried to stop Musk from completing its $ 44 billion takeover of the social media company before 2025.

In a proposed class action lawsuit filed in the Delaware Chancery Court, the Orlando Police Pension Fund said the Delaware law prohibited a quick merger because Musk had agreements with other major Twitter shareholders, including his financial adviser Morgan Stanley (MS.N) and Twitter founder Jack Dorsey, to support the acquisition.

The fund said that these agreements made Musk, which owns 9.6% of Twitter, the effective “owner” of more than 15% of the company’s shares. It said it required a three-year postponement of the merger unless two-thirds of the shares not “owned” by him were approved.

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

Musk hopes to complete its Twitter acquisition of $ 54.20 per share this year, in one of the world’s largest leveraged buyouts.

He also runs the electric car company Tesla Inc (TSLA.O), heads The Boring Co and SpaceX, and is the world’s richest person according to Forbes magazine.

Twitter and its board, including Dorsey and CEO Parag Agrawal, were also named as defendants.

Twitter declined to comment. Lawyers for the Musk and Florida Fund did not immediately respond to requests for comment.

The lawsuit also seeks to declare that Twitter directors violated their fiduciary duties, and recover legal fees and costs. It did not make clear how the shareholders thought they could be harmed if the merger was terminated according to plan.

On Thursday, Musk said he had raised about $ 7 billion, including from sovereign wealth funds and friends in Silicon Valley, to help fund a takeover. read more

Musk had no funding in line when he announced plans to buy Twitter last month.

Some of the new investors seem to be sharing interests with Musk, a self-described free speech absolute that could change the way the San Francisco-based company moderates content.

The Florida State Pension Fund is also investing in Twitter, and Gov. Ron DeSantis said this week that it could make $ 15 to $ 20 million in profits if Musk completes the acquisition.

In afternoon trading, Twitter shares were down 60 cents to $ 49.76.

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

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Reporting by Jonathan Stempel in New York Editing by Howard Goller and Mark Potter

Our standards: Thomson Reuters Trust Principles.

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