New York, Aug 30 (EFE).- In a letter published Tuesday, lawyers for Elon Musk pointed to recent revelations from a former Twitter executive as justification for the Tesla CEO’s decision to back out of an agreement to purchase the online platform for $44 billion.
The “allegations, if true, demonstrate that Twitter has breached the following provisions of the Merger Agreement, thereby giving the Musk Parties the right to terminate the Merger Agreement pursuant to its terms as more fully described below,” the attorneys told the United States Security and Exchange Commission (SEC).
Peiter “Mudge” Zatko, Twitter’s head of security until he was fired in January, said last week in interviews with CNN and The Washington Post that the company’s management misled government regulators and the firm’s own board about the incidence of spam on the platform, security protocols and internal reporting.
Musk, reputedly the world’s second-wealthiest person, Musk formally withdrew from the merger agreement on July 8, claiming that Twitter was in “material breach of multiple provisions” of the accord, giving him the right to walk away without having to pay the $1 billion cancelation fee mandated in the contract.
He accused the company of having failed to supply him with the information necessary to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform.”
The mogul has repeatedly raised that issue since signing the merger agreement in April, but Twitter has stuck to its contention that bogus accounts, commonly referred to as “bots,” represent no more than 5 percent of the total on the platform.
Musk’s second Termination Letter contends that Twitter management withheld relevant information from the founder and CEO of SpaceX during the merger negotiations, which “provides a basis for rescission” of the merger agreement.
Four days after Musk abandoned the deal, Twitter filed suit, asking the Delaware Court of Chancery to compel the South African-born billionaire to go through with the transaction.
The Court of Chancery adjudicates many business disputes because Delaware is the legal domicile of nearly 2 million firms, including more than two-thirds of Fortune 500 companies.
Musk’s legal team has already subpoenaed Zatko to testify when the case goes to trial in October.
Responding to the second Termination Letter, Twitter said Tuesday that Musk’s assertions 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.” EFE Analysts suggest that Musk is using the dispute over bots as a pretext to walk away from an acquisition that has become vastly more expensive.
The offer Twitter accepted in April, $54.20 per share, represented a significant premium over its share price of $39.31 prior to Musk’s acquisition of 9 percent of the company.
Since then, Twitter’s market capitalization has dropped by 25 percent, while Tesla shares – constituting the bulk of Musk’s wealth – have likewise fallen amid a broad decline in tech stocks.