Florida Pension Fund Sues Musk and Twitter to Push Takeover to 2025

The Orlando Police Pension Fund has filed a lawsuit against social media site Twitter and billionaire Tesla CEO Elon Musk arguing that his bid to buy the platform cannot take effect until 2025.

Attorneys for the pension fund, which is a Twitter shareholder, argue that the delay is required by a Delaware law that necessitates a three-year wait to close the deal because Musk is an "interested shareholder."

Their complaint argues that Musk entered into agreements with other shareholders, including Twitter founder Jack Dorsey and the investment bank Morgan Stanley, to support his bid for the platform.

Lawyers for the pension fund filed the complaint with the Delaware Chancery court on Thursday. The complaint is based on a state statute passed in the 1980s during a period of corporate takeovers and designed to protect the rights of shareholders.

The pension fund notes that Musk owned around 9.6 percent of Twitter when company's board approved his takeover bid and argues that he had an "agreement, arrangement or understanding" with other shareholders. The fund says that Musk is relying on those agreements to support his takeover bid.

The complaint posits that under Delaware law, that situation makes Musk an "interested shareholder" and requires him to wait for three years or win approval from Twitter investors who hold "at least 66 2/3% of Twitter's outstanding voting stock."

Musk is seeking to acquire Twitter for $54.20 a share at a total cost of $44 billion.

The filing also notes that Twitter "is a Delaware corporation headquartered in San
Francisco, California" and the attorneys say the plaintiff "seeks a prompt trial."

The pension fund's complaint focuses on the fact that Morgan Stanley owns 8.8 percent of Twitter and has a long-standing relationship with Musk. The investment bank is acting as his financial advisor for the takeover bid.

"Morgan Stanley also arranged tens of billions of dollars in financing to facilitate Musk's ability to close the Proposed Takeover and committed to serve as the largest single lender facilitating the deal," the filing says.

The complaint further alleges that Musk had an agreement with Dorsey and cites the Twitter founder's public comments welcoming the billionaire's bid. Dorsey owns 2.4 percent of the company.

The Orlando Police Pension Fund therefore argues that Musk was effectively the "owner" of more than 15 percent of Twitter when he launched his takeover attempt and goes on to accuse Twitter's directors of breaching their fiduciary duties.

Members of the social media company's board are also named as co-defendants along with Musk, Dorsey and Twitter itself.

The pension fund is seeking to have the court declare Musk an "interested shareholder", that Twitter must meet the requirements of Delaware law for the takeover to go ahead, and the recovery of costs.

Twitter declined to comment on the matter when reached by Newsweek on Saturday.

Elon Musk's Twitter Account Is Displayed
In this photo illustration, the Elon Musk’s Twitter account is displayed on the screen of an iPhone on April 26, 2022 in Paris, France. Musk and Twitter are being sued in order to delay his takeover of the social media company. Chesnot/Getty Images