Florida pension fund sues Elon Musk over Twitter deal
Musk and Twitter, arguing that the deal can't legally close until 2025 due to the billionaire's stake in the platform. The proposed class-action lawsuit — filed today by the Orlando Police Pension Fund in the Delaware Chancery court— also declares that Twitter’s board of directors breached its fiduciary duties by allowing the deal to go through.
In a message to Engadget, Tulane Law School’s Professor Ann M. Lipton says the lawsuit raises"some very novel issues" under Delaware corporate law. Under aknown as Section 203, shareholders who own more than 15 percent of the company can’t enter a merger without two-thirds of the remaining shares granting approval. Without this approval, the merger can’t be finalized for another three years.
The fund’s lawyers state that Musk initially owned roughly 10 percent of Twitter’s shares, which would seemingly not make Section 203 applicable. But, the fund argues, Musk formed a pact with Morgan Stanley and former CEO Jack Dorsey to advance the deal.
“Section 203 is not often litigated, and so the issue of whether Musk's relationship with these parties actually counts for statutory purposes is an unsettled question and it will be interesting to watch how it unfolds,” wrote Lipton. More details of Musk’s highly complex $44 billion buyout of Twitter have been made public since the social media platform
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