Tesla CEO, Elon Musk, has again justified his request to terminate the $44 billion Twitter acquisition deal. This time, the billionaire is citing recent claims by a former security head of the social media firm, which supported his stance on the number of spam accounts on Twitter.
Last week, Peiter Zatko, a famed hacker known as “Mudge”, who served as Twitter’s head of security from November 2020 until his firing in January, said in his complaint that Twitter prioritized user growth over reducing spam and falsely claimed it had a solid security plan.
Musk’s legal team in a letter dated August 29, 2022, and sent to Twitter highlighted Zatko’s claims as another reason to scrap the deal. The letter, which was disclosed in a Securities and Exchange Commission filing, points to Zatko’s allegations that Twitter is in violation of its 2011 consent order with the Federal Trade Commission; that the company suffers from grave security vulnerabilities; that it has violated intellectual property rights; and that it consented to hiring Indian government agents under pressure by the country.
Musk’s legal team claims that the allegations, if true, represent breaches of Twitter’s side of the acquisition bargain and should allow him to exit the deal. The letter claims that Twitter’s alleged misrepresentations to its board and regulators — and investigations that could result — has or could constitute a “material adverse effect” that would allow him to walk away, per the original contract.
Twitter, however, said in its regulatory filing the fresh termination notice was invalid and wrongful under the deal terms.
What you should know
- Musk decided to terminate the $44 billion deal in July, saying the company misled him and regulators about the true number of spam or bot accounts on the microblogging platform.
- In a Securities and Exchange Commission filing, Elon Musk’s lawyer Mike Ringler, cited many reasons for his decision to quit, noting that “Twitter has not complied with its contractual obligations.”
- Ringler claimed that Twitter did not provide Musk with the relevant business information he requested, as Ringler said the contract would require. Musk has previously said he wanted to assess Twitter’s claims that about 5% of its monetizable daily active users (mDAUs) are spam accounts.
- His legal team said allegations on certain facts, which were known to Twitter prior to July 8 but were not disclosed to them, provide additional and distinct bases to end the deal, according to a regulatory filing by Musk on Tuesday.
- The latest turn of events comes as the two sides head to a five-day trial at the Delaware Court of Chancery set to begin on Oct. 17. Twitter is asking Chancellor Kathaleen McCormick to order Musk to buy it for the agreed $54.20 per share.
