Elon Musk continues coming up with new justifications for why he thinks he can back out of his $44 billion deal to take over Twitter.
Musk’s attorneys criticized Twitter in a letter dated September 9 for its separation agreement with Peiter “Mudge” Zatko, the social media platform’s former head of security who was let go in January. Under this agreement, Twitter paid severance payments totaling $7.75 million to Zatko and his attorney.
That, in accordance with Musk’s legal team, violated a clause of the acquisition agreement, according to which Twitter agreed not to grant or provide any severance or termination payments or benefits to any Company Service Provider aside from the payment of severance amounts or benefits in the regular course of business consistent with past practice without Musk’s prior approval. According to the letter, former workers of Twitter are included in the definition of “Company Service Provider.”
Twitter did not obtain the approval of the defendants before making this payment, and the defendants were not informed of this payment; claims the letter was sent to the SEC on Friday. Defendants were not aware of this payment until Twitter filed the separation agreement with the court on September 3, 2022.
In SEC and FTC filings, Zatko, whom Twitter has described as a disgruntled ex-employee, said that Twitter had disguised, among other issues, “severe, flagrant” privacy and security flaws.
In a letter sent last month, Musk’s attorneys cited Zatko’s assertions as further proof that the multibillionaire’s agreement to purchase Twitter was invalid. Because the firm, according to Musk, could not back up its assertion that spam and false accounts make up less than 5% of active users, he informed Twitter in July that he was leaving the agreement.
In a lawsuit filed in July, Twitter demanded that Musk honor his promise to acquire the social media business for $54.20 per share. Musk is the CEO of Tesla and SpaceX. Starting on October 17, a judge in the Delaware Court of Chancery has scheduled a five-day trial to hear Twitter’s case against Musk. This Monday, the court presiding over the case ordered that Musk may add claims from Zatko’s complaint to his countersuit but denied Musk’s request to push back the trial’s start date until November.
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Musk, who holds the largest single holding in Twitter with a 9.6% ownership, was initially excited about the notion of acquiring it. He floated concepts like verifying every user’s identity and charging companies to use the social network. However, the legal team for Twitter claims that Musk changed his mind because his personal wealth declined along with Tesla’s stock price.
An attorney for Twitter read aloud a text Musk sent to a Morgan Stanley banker on May 8 regarding the acquisition agreement at a hearing in the Delaware court on Tuesday.
Elon Musk receives criticism from the judge for withholding text messages
Elon Musk received harsh criticism from the judge for failing to properly turn over text conversations that could have been used as evidence in Twitter Inc.’s lawsuit attempting to compel the billionaire to finish his proposed $44 billion takeover of the social media platform.
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In a ruling on Wednesday, Delaware Chancery Judge Kathaleen St. Jude McCormick noted “glaring deficiencies” in the way Musk and his attorneys responded to Twitter’s request for text messages he and top aide Jared Birchall sent and received regarding the proposed deal and his subsequent attempt to withdraw from it. As a result, she gave the men orders to turn over phone records pertaining to their text messages.
