New Delhi: The Orlando Police Pension Fund has sued Elon Musk and his $44 billion buyout of Twitter, claiming the deal may not close until 2025 due to Tesla CEO’s stake in the micro-blogging platform .
The proposed class-action lawsuit filed by the Orlando Police Pension Fund in Delaware Chancery Court alleges that since Musk was a “willing stockholder” before the merger agreement was approved by Twitter’s board, “the proposed acquisition may not be legally closed.” Absent approval by 2025 by an affirmative vote of more than 66 percent of the voting stock of Musk-owned Twitter within the meaning of Section 203″.
Former Twitter CEO Jack Dorsey, current CEO Parag Agarwal and the company’s board were also named as defendants in the lawsuit.
Under Section 203, shareholders who own more than 15 percent of the company cannot enter into a merger without approving the remaining two-thirds of the shares.
Musk began acquiring Twitter shares in January 2022 and owned approximately 9.6 percent of Twitter’s outstanding voting stock when the board approved the proposed acquisition.
In connection with his efforts to acquire Twitter, Musk also had an “agreement, arrangement or understanding” with at least two other significant beneficial owners of Twitter’s outstanding voting stock within the meaning of Section 203, read the lawsuit.
They were Morgan Stanley, who owns about 8.8 percent of Twitter’s outstanding voting stock and serves as financial advisor to Musk, and Twitter co-founder Dorsey, who is a beneficial owner of about 2.4 percent of Twitter’s voting stock. And encouraged Musk to take Twitter private.
“Additionally, according to public reporting, it appears that Musk also has additional agreements, arrangements or understandings with other significant holders of Twitter common stock, and that support for the proposed takeover Musk has secured prior to Twitter Board’s approval of the deal.” is,” the suit read.
Musk was, therefore, a “willing stockholder” within the meaning of Section 203 before the Board approved the proposed acquisition.
The proposed class-action lawsuit states that since Musk is an “interested stockholder” within the meaning of Section 203, Twitter’s $44 billion acquisition cannot legally close within three years of Musk becoming an “interested stockholder”. That is, as long as the proposed acquisition is approved by an affirmative vote of more than at least 66 percent of Twitter’s outstanding voting stock without “owning” Musk.
Musk, who has to pay $21 billion out of his own pocket for the deal, could take over as the temporary CEO of Twitter if the acquisition deal goes through.
A fresh US SEC filing this week revealed that Musk has secured nearly $7.14 billion in equity commitments from friends and other investors to acquire Twitter.
Musk received $1 billion from Oracle co-founder Larry Ellison and $5 million from Honeycomb Asset Management, which invested in his SpaceX company, the report noted.