In their latest exchange of legal fire, Twitter has rejected new claims from billionaire Elon Musk that a whistleblower’s claims about the company give him grounds to exit his proposed $44 billion takeover.
Citing an effort in July by Musk to wriggle out of the deal, Twitter lawyer William Savitt described Musk’s newest pronouncement “invalid and wrongful.”
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Musk, the CEO of Tesla and founder of SpaceX, offered to buy Twitter last April, but the transaction has been troubled from the beginning. Musk has ramped up his frequent criticisms of the social media firm and a legal tussle, predictably, has ensued. The parties are due to head to trial in October.
The merger agreement pegs the acquisition price at $54.20 a share. Twitter stock slipped a fraction at the start of today’s trading to $39.90. The company’s board pursued alternative offers to Musk’s but came up empty, so the notion of Musk’s offer vaporizing is a doomsday scenario for Twitter.
In his newest attempt to invalidate the transaction, Musk’s legal team alluded to claims by whistleblower Peiter Zatko, a former Twitter security exec who recently went public with assertions about malfeasance by Twitter on its platform. Musk has long criticized Twitter for hosting too many fake accounts and bots. Twitter has responded that its understanding is the number of bogus accounts is less than 5% of the total number of accounts. But Musk sees the bot issue as a dealbreaker and Zatko has been subpoenaed to testify in the pending trial.
Zatko’s whistleblower complaint “alleges far-reaching misconduct at Twitter — all of which was disclosed to Twitter’s directors and senior executives, including [CEO] Parag Agrawal,” Musks lawyers wrote in their letter to Twitter, “that is likely to have severe consequences for Twitter’s business.”
Musk’s claims, according to Savitt, are “based solely on statements made by a third party that, as Twitter has previously stated, are riddled with inconsistencies and inaccuracies and lack important context. Contrary to the assertions in your letter, Twitter has breached none of its representations or obligations under the agreement.” The company, Savitt adds, “intends to enforce the agreement and close the transaction on the price and terms agreed upon with the Musk parties.”
The five-day trial in Delaware Chancery Court is scheduled to begin on October 17. In a separate court filing today, Musk’s attorneys also requested a delay of the trial until November, but the court has not yet ruled on the petition.
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