Elon Musk files another notice to abandon Twitter acquisition after whistleblower claims

In this illustration, Elon Musk’s Twitter account is displayed on a mobile phone screen with the Twitter logo in the background. A whistleblower’s complaint that Twitter misled federal regulators about the company’s security risks could provide Elon Musk with new ammunition in his bid not to buy the company for $44 billion.

Sheldon Cooper | Light flare | Getty Images

Elon Musk’s legal team filed another notice on Tuesday to end his $44 billion purchase deal Twitterciting additional reasons.

Twitter shares were down more than 1% in premarket trading.

Latest filings come after former Twitter security chief Peiter “Mudge” Zatko alleged earlier this month the social media company’s “extreme and glaring flaws” related to privacy, security and content moderation.

On July 8, Musk’s legal team initially filed a notice with the U.S. Securities and Exchange Commission (SEC) for end the acquisition of Twitter. Musk’s legal team alleged that “Twitter breached its contractual obligations.”

The follow-up notice, disclosed Tuesday to the SEC, cites Zatko’s allegations as additional reasons to terminate the deal.

“Allegations regarding certain facts, known to Twitter before and on or after July 8, 2022, but not disclosed to the Musk parties before and at that time, have since come to light and provide additional and separate grounds for terminating the agreement of merger,” Mike Ringler, Musk’s legal representative from Skadden, Arps, Slate, Meagher & Flom LLP wrote in a letter to Twitter’s chief legal officer.

Ringler said in the letter that the final termination notice is “not legally required” to terminate the merger agreement, but is being delivered in the event the July 8 filing is “determined to be invalid for any reason”.

The letter on behalf of Musk states that Zatko’s complaint “alleged serious misconduct on Twitter – all of which has been disclosed to Twitter directors and senior executives, including (CEO) Parag Agrawal – which is likely to have serious consequences. for Twitter activities.

Musk’s attorney says Zatko alleges Twitter is in “material breach” of its obligations under its 2011 agreement with the Federal Trade Commission. The letter laid out some of Zatko’s other allegations, including claims that Twitter is “particularly vulnerable to systemic disruptions resulting from data center failures or malicious actors”, which senior management knew but “ignored and sought to obscure. “.

“These allegations, if true, demonstrate that Twitter breached the following provisions of the Merger Agreement, thereby giving the Musk Parties the right to terminate the Merger Agreement in accordance with its terms described in more detail below” , indicates the letter.

Twitter and Elon Musk will be tried on October 17 in Delaware to resolve Musk’s attempt to reverse his acquisition of the company unless they reach a settlement first.

CNBC’s Lora Kolodny contributed to this report.

This is breaking news. Please check for updates.

Leave a Comment