Twitter has said Elon Musk’s latest notice to terminate his $44 billion (£38bn) acquisition of the company is “invalid and wrongful”, as the billionaire continues his efforts to scrap the deal.
In a Friday letter to Twitter Musk’s lawyers said that Twitter’s failure to seek Musk’s consent before paying a $7.75m severance funds to former employee Peiter “Mudge” Zatko in a June settlement violated a clause in the acquisition agreement.
Twitter replied in a securities filing on Monday that Musk’s claim was invalid and that it hadn’t breached any terms of their agreement.
Musk’s notice said the deal includes a condition postulating that Twitter could not pay any non-ordinary severance or termination payments to “Company Service Providers” including ex-employees.
The Wall Street Journal reported last week that Twitter reached a confidential settlement with Zatko in June after Zatko left the company in January.
The settlement included a standard nondisclosure agreement, but this allowed Zatko to speak about Twitter through whistleblower complaints and congressional hearings.
In July, days after the settlement, Zatko said in whistleblower allegations that Twitter had insufficient security protections and had obscured the true number of bot or spam accounts on the service, a key argument in Musk’s earlier efforts to terminate the buyout.
Earlier this month Chancellor Kathaleen McCormick of the Delaware Court of Chancery said Musk could use Zatko’s claims in his lawsuit against Twitter, but denied a request to delay the 17 October trial.
The Twitter filing comes as the firm prepares for an extraordinary meeting later on Tuesday where shareholders are to vote on the deal.
On the same day Zatko is to meet the US Senate judiciary committee to discuss the allegations.
“With the Musk camp now being allowed to include the Zatko claims in its testimony for Delaware, (Tuesday’s) hearing will be closely watched by the Street,” said analyst firm Wedbush in a research note.
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