Elon Musk may have just bought Twitter for $44 billion, but he’s already facing his first lawsuit over his ownership of the social media platform.
According to CNN, the Orlando Police Pension Fund filed a class action lawsuit against Musk and Twitter Inc. to challenge the billionaire’s ability to buy the platform. They argued that the deal can’t be closed before 2025 because Musk was already an “interested shareholder” prior to the buyout.
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The lawsuit argues that the merger goes against Delaware law because Elon had pre-existing agreements with Twitter shareholders – including financial advisor Morgan Stanley and Twitter’s founder Jack Dorsey – that support the buyout.
As per Delaware law, deals of this nature cannot be closed before three years unless holders of two-thirds of shares sign off.
But since Musk has pre-existing agreements with Twitter shareholders, he’s effectively tied to the shares and they cannot be counted towards the two-thirds necessary to seal the deal so quickly. This puts a damper in Musk’s hope to complete the billion-dollar takeover before the end of the current year.
The lawsuit also argues that Twitter’s directors had breached their fiduciary duties. The Florida pension fund is seeking an unspecified amount in legal fees and other related costs.
Yahoo! Finance notes that representatives for both Musk as well as the Florida fund declined to comment on the ongoing case.
Musk announced his interest in buying Twitter last month in order to take the company private. Last Thursday, the Tesla CEO confirmed that he’d received over $7 billion of equity from investors to help fund the record-breaking takeover, including from fellow billionaire Larry Ellison.
It’s expected the Musk will serve as the temporary CEO of Twitter once the takeover is official. The platform’s current CEO Parag Agrawal has only been in the position for a few months.
According to a report by Reuters, Agrawal told employees that the future of Twitter will be uncertain with Musk at the helm.
“Once the deal closes, we don’t know which direction the platform will go,” Agrawal reportedly said in response to questions over whether former U.S. President Donald Trump will be allowed back on Twitter (he was permanently banned last year).
It was implied earlier this month that Trump urged Musk to buy the platform to protect free speech, though the SpaceX founder has denied rumors the former president influenced his decision. “I’ve had no communication, directly or indirectly, with Trump, who has publicly stated that he will be exclusively on Truth Social,” Musk tweeted on Friday.
However, with this new lawsuit hanging over Twitter and Musk’s heads, it remains to be seen if and when the billion-dollar goes through.
Source: CNN, Yahoo! Finance, CNBC, Insider,
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