A Florida pension fund has sued Tesla CEO Elon Musk and Twitter Inc. in a bid to halt the self-avowed “free speech absolutist” from finalizing his $44 billion takeover bid of the social media platform.
In the proposed class-action lawsuit, brought by the Orlando Police Pension Fund and filed in Delaware Chancery Court, the plaintiffs claim that Musk cannot legally finalize his takeover until at least 2025 unless holders of two-thirds of shares not owned by him sign off on the deal.
The complaint claims that Delaware law prohibits a quick takeover because Musk has agreements with other big Twitter shareholders to support the buyout, including Twitter founder Jack Dorsey and Musk’s financial adviser Morgan Stanley. Dorsey owns 2.4 percent of Twitter shares while Morgan Stanley owns around 8.8 percent.
When Musk took a 9 percent stake in Twitter, he became an “interested stockholder” and his takeover bid requires the delay, the lawsuit claims.
Besides Musk, the lawsuit also names the Twitter board as defendants.
Musk, who is the world’s wealthiest individual, according to Forbes, has sought to buy Twitter in a deal estimated to be worth around $44 billion.
Besides pledging to provide around $21 billion in cash, Musk has outlined other sources of funding for the takeover, including $13 billion in bank loans secured by Twitter and $12.5 billion backed by a portion of his stake in Tesla.
Musk has also received equity commitment letters from 19 investors, who have committed to pay $7.14 billion in cash or Twitter common stock (valued at $54.20 per share), according to a May 5 securities filing.
The group of investors includes a Saudi prince and Oracle co-founder Larry Ellison, who has agreed to invest $1 billion. The biggest contribution is to come from Saudi Prince Alwaleed bin Talal, a billionaire and one of Twitter’s largest stockholders, who has pledged $1.9 billion.
Twitter has accepted Musk’s proposal of $54.20 per share in cash, putting its value at around $44 billion.
Musk has said his aim in seeking to buy Twitter is to take the company private and transform it into an “inclusive arena for free speech.”
The takeover attempt is not about making money, Musk has insisted, but to affect a number of changes to the platform and reduce the “civilizational risk” to freedom and democracy from what Musk has described as Twitter’s excessive and opaque restrictions on expression.
This is an excerpt from The Epoch Times.
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