Orlando (Fla.) Police Pension Fund filed a lawsuit against Twitter Inc. and selected shareholders, including Elon Musk, alleging Mr. Musk's proposed acquisition of the social media company may not lawfully close until 2025.
The suit, filed Tuesday in Delaware Chancery Court, alleges that because Mr. Musk was an "interested stockholder" before the April 25 agreement for his acquisition of Twitter in an approximately $44 billion deal, the takeover cannot close until 2025 without approval of 66.67% of Twitter's voting stock not already owned by him, a court filing shows.
The $734 million pension fund is the sole plaintiff in the lawsuit.
The filing references Section 203 of Delaware corporate law, which states a corporation shall not engage in any business combination with any stockholder for at least three years following the date the stockholder came to own at least 15% of the corporation's outstanding stock.
The complaint references the 9.6% of Twitter's outstanding voting stock that Mr. Musk owned as of April 25; Mr. Musk's agreement with Morgan Stanley, his financial adviser and financier in connection with the takeover, which owns about 8.8% of stock; and Twitter co-founder, former CEO and director Jack Dorsey's ownership of 2.4% of Twitter stock.
The filing references Mr. Dorsey's encouraging Mr. Musk to take Twitter private and the likelihood of receiving equity in the newly-private company if the takeover should close.
The suit seeks declaratory judgment that Musk is an "interested stockholder" and to hold the members of Twitter's board accountable for not properly conditioning the merger on the 66.67% vote required by Section 203.
Joseph E. White III, founding shareholder of Saxena White, counsel for the plaintiff, and officials at Twitter declined to comment.
