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Twitter shareholders want Elon Musk to follow through on his promise to purchase the social network for $44 billion. However, the tech mogul is exerting every effort to thwart the purchase.
The shareholders voted on Tuesday to approve Musk’s acquisition of the firm, which was first revealed in April.
The essential problem, however—that Musk no longer wants to purchase Twitter—made the shareholder vote a formality of little consequence. So instead, Musk plans to contest Twitter’s demand that he complete the transaction at the previously agreed-upon price of $54.20 per share in court.
Musk, the richest man in the world and the CEO of Tesla and SpaceX, has told Twitter three times through legal counsel that Musk feels the terms of the acquisition agreement have been broken. Musk’s concerns are “invalid and unjust,” The social media giant has consistently retorted.
Most recently, in a letter to Twitter dated September 9, Musk’s attorneys criticized the social media platform’s severance agreement with Peiter “Mudge” Zatko, its former head of security who was let go in January, under which Zatko and his attorney received severance payments totaling $7.75 million from the social media company. According to Musk’s legal team, it was against the terms of their agreement for Twitter to “award or offer any severance or termination money or benefits” without Musk’s consent.
In SEC and FTC filings, Zatko, whom Twitter has described as a disgruntled ex-employee, said that Twitter had concealed, among other issues, “severe, flagrant” privacy and security flaws. In a separate testimony on Tuesday, Zatko reiterated and expanded on his claims in front of the Senate Judiciary Committee.
Musk’s attorneys referenced Zatko’s assertions in a letter sent last month as further proof that the agreement to buy Twitter was invalid. That followed the Musk team’s initial announcement to Twitter in July that he was pulling out of the agreement due to the company’s apparent inability to back up its claim that spam and false accounts make up less than 5% of active users.
In an effort to uphold the buyout agreement, Twitter sued Musk in July. 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. Musk was granted permission to include claims from Zatko’s lawsuit in his countersuit last week, but Musk’s request to push back the trial’s start date until November was denied by the judge presiding over the case.
Musk, who holds the largest holding in Twitter with a 9.6% ownership, was initially excited about the notion of acquiring it and floated concepts like verifying all users’ identities and charging companies to use the social network. However, the legal team for Twitter claims that Musk changed his mind once his personal wealth decreased along with Tesla’s stock price.
Why Twitter took Elon Musk to court
Because Musk allegedly broke the contract, Twitter sued him. The Delaware Court of Chancery is now hearing the matter, and the trial is scheduled to start in the middle of October.
A former Twitter security head recently submitted a whistleblower complaint alleging gross securities violations by the business, and the court in the case recently allowed Musk’s team to alter their counterclaim against Twitter to include those claims. Peiter “Mudge” Zatko, the whistleblower, gave testimony earlier on Tuesday before a Senate committee.