Tesla’s infamously erratic and eclectic CEO Elon Musk surprised many in April when he announced plans to buy Twitter for $44 billion. However, with the deal still pending approval by the relevant authorities, Musk’s attempts to buy the social media network encountered a new challenge: a Florida pension fund.
The Orlando Police Pension Fund, the group in charge of pension funds for the Orlando Police Department in Florida, has announced a class action lawsuit against Musk’s takeover of Twitter. Although he is originally from Florida, the lawsuit is ongoing in the state of Delaware. Indeed, the Orland Police Pension Fund believes Musk had reached an agreement with other Twitter shareholders, such as former CEO and founder Jack Dorsey, for their support before trying to take over Twitter. . These agreements would trigger a law in Delaware that would require an additional three years before the agreement is concluded. As such, if the lawsuit ends against Musk, the deal could theoretically only be completed by 2025.
Specifically, the issue arose because Musk already owned about 10% of Twitter when he announced his intention to make Twitter private. Together with his deals with Dorsey and his investment Morgan Stanley, which owns about 8% of Twitter, this makes Musk an “interested shareholder” under Delaware corporate law. The Orlando police pension fund is now trying to get a Delaware judge to confirm that Musk is an “interested shareholder”. However, Musk could still circumvent the three-year deal by securing support from investors who control at least two-thirds of Twitter’s outstanding voting shares and who can be shown to be independent of Musk.
This is just the latest in a series of controversies around Elon Musk and Twitter of course. It all started in early April when Musk first bought $2.9 billion worth of Twitter stock for his first 9.2% stake in the company. Twitter CEO Parag Agrawal later confirmed that Musk would be offered a seat on Twitter’s board. In a surprise twist, Musk rejected the offer a week later, with Agrawal revealing what happened on Twitter.
Musk then responded by trying to buy out the entire company instead on April 14, offering $43.4 billion at $54.20 per share. Twitter’s board then used a “poison pill” defense to veto any takeover bids. However, Twitter finally announced that it had accepted its offer on April 25, with Musk now having to complete his acquisition or risk paying a billion-dollar termination fee. Almost everyone is still waiting for full confirmation of Musk’s takeover, and the unfolding of the saga continues to be seen.
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