Elon Musk and Twitter were sued Friday by a Florida pension fund seeking to block Musk from completing its $44 billion takeover of the social media company by 2025.
In a proposed class-action lawsuit filed in Delaware Chancery Court, the Orlando police pension fund said Delaware law prohibited a quick merger because Musk had agreements with other major shareholders of Twitter, including its financial adviser Morgan Stanley and Twitter founder Jack Dorsey, to support the takeover.
The fund said the deals made Musk, who owns 9.2% of Twitter, the beneficial “owner” of more than 15% of the company’s stock. He said the merger should be delayed for three years unless two-thirds of the shares he did not own were approved.
Morgan Stanley owns about 8.8% of Twitter shares and Dorsey owns 2.4%.
Musk hopes to complete his Twitter buyout at $54.20 per share this year, in one of the largest leveraged buyouts in the world.
Musk, the richest person in the world, also runs electric car company Tesla and runs The Boring Co and SpaceX.
Twitter and its board of directors, including Dorsey and CEO Parag Agrawal, were also named as defendants.
Twitter declined to comment. Attorneys for Musk and the Florida fund did not immediately respond to requests for comment.
The lawsuit also seeks to declare that the administrators of Twitter breached their fiduciary duties and to recover costs and legal fees. He did not elaborate on how shareholders believe they might be harmed if the merger is completed on time.
On Thursday, Musk said he had raised around $7 billion, including from investors like tech mogul Larry Ellison, the state of Qatar investment fund and the biggest cryptocurrency exchange. in the world, to help fund the takeover.
According to the filing with the United States Securities and Exchange Commission, Ellison is investing $1 billion in the transaction. Saudi investor Prince Alwaleed bin Talal, who initially opposed the takeover, agreed to incorporate his $1.9 billion stake into the deal, according to the filing.
The filing also showed that a margin loan taken out by Musk to fund the deal would be reduced from $12.5 billion to $6.25 billion.
News of the funding came as CNBC reported that Musk would serve as the social media platform’s temporary chief executive for a few months once the deal is done.
Musk had no funding planned when he announced his intention to buy Twitter last month.
Some of the new investors appear to share interests with Musk, a self-proclaimed “free speech absolutist” who could change the way the San Francisco-based company moderates content.
Florida’s state pension fund also invests in Twitter, and state governor Ron DeSantis said this week it could make a profit of $15 million to $20 million if Musk completes its takeover.
In afternoon trading, Twitter shares fell 60 cents to $49.76.