The Orlando Police Pension Fund has filed a lawsuit against Elon Musk and his $44 billion takeover of Twitter, alleging that the transaction would not conclude until 2025 due to the Tesla CEO’s interest in the microblogging network.
The Orlando Police Pension Fund filed a proposed class-action lawsuit in Delaware Chancery Court, alleging that because Musk was an “interested stockholder” before Twitter’s board approved the merger agreement, “the proposed takeover may not lawfully close until 2025 absent approval by the affirmative vote of over 66 percent of Twitter’s voting stock not owned’ by Musk within the meaning of Section 203.”
Former Twitter CEO Jack Dorsey, current CEO Parag Agrawal, and the company’s board of directors were all listed as defendants in the complaint.
Shareholders who possess more than 15% of the firm are prohibited from merging without the permission of two-thirds of the remaining shares.
Musk started buying Twitter shares in January 2022 and held 9.6% of the company’s outstanding voting stock when the Board authorized the Proposed Takeover.
According to the complaint, Musk had an “agreement, arrangement, or understanding” with at least two other large beneficial owners of Twitter’s outstanding voting shares in conjunction with his acquisition attempts.
They were Morgan Stanley, which holds roughly 8.8% of Twitter’s outstanding voting shares and acts as Musk’s financial advisor, and Twitter co-founder Dorsey. He owns around 2.4 per cent of Twitter’s voting stock and pushed Musk to take the company private.
“Moreover, according to public reporting, it appears likely Musk had and has an additional agreement, arrangement, or understanding’ with other significant holders of Twitter common stock whose support for the Proposed Takeover Musk secured before the Twitter Board approved of the deal,” the lawsuit stated.
As a result, before the Board authorized the proposed purchase, Musk was an “interested stakeholder within the meaning of Section 203,” it stated.
According to the proposed class-action lawsuit, because Musk is an “interested stockholder” under Section 203, the $44 billion takeovers of Twitter cannot close within three years of Musk becoming an “interested stockholder” unless the Proposed Takeover is approved by at least 66 per cent of Twitter’s outstanding voting stock that is not “owned” by Musk.
Musk, who must pay $21 billion out of pocket for the transaction, is expected to take over as Twitter’s interim CEO once the deal is completed.
According to a new US SEC filing this week, musk has obtained over $7.14 billion in stock commitments from friends and other investors to purchase Twitter.
According to the source, Musk got $1 billion from Larry Ellison, co-founder of Oracle, and $5 million from Honeycomb Asset Management, which invested in his SpaceX firm.