Twitter shareholders voted in favor of carrying out Elon Musk’s $44 billion acquisition of the social media company on Tuesday despite his attempts to pull out of the deal.
The shareholders’ approval signals Twitter’s intent to move forward with the deal, even after Musk sent a third letter to the social media company on Friday attempting to terminate the deal. In the new letter, attorneys for Musk argue that an alleged $7.75 million severance payment Twitter made to its former head of security violated a provision of the acquisition contract.
The severance was given to Peiter Zatko on June 28 as part of a separation agreement. Zatko testified before the Senate on Tuesday about Twitter’s alleged security and privacy vulnerabilities. For its part, Twitter has previously dismissed the allegations as “riddled with inaccuracies” and has affirmed that security and privacy are top priorities.
Under the contract with Musk, Twitter agreed not to provide any severance payments to employees in amounts outside “the ordinary course of business consistent with past practice.”
Twitter called Musk’s termination effort “invalid and wrongful.”
Musk first began trying to pull the plug on the deal in July.
A regulatory filing from attorney Mike Ringler on behalf of Musk argued that Twitter is “in material breach of multiple provisions” of their April 25 merger agreement, and “appears to have made false and misleading representations upon which Mr. Musk relied when” agreeing to purchase the company.
Musk has claimed Twitter is undercounting fake “bot” accounts, which he says is information that is “fundamental to Twitter’s business and financial performance.”
The letter claims that Twitter must provide all the data that he requests “for any reasonable business purpose related to the consummation of the transaction” and accuses the company of failing to comply with its contractual obligations.
“For nearly two months, Mr. Musk has sought the data and information necessary to ‘make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform,’” the letter reads. “Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”
Twitter filed a lawsuit against Musk in July after he sent a letter to the platform’s board expressing his intent to terminate his bid.
The company argues Musk is refusing to “honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests,” according to the complaint.
“Rather than bear the cost of the market downturn, as the merger agreement requires, Musk wants to shift it to Twitter’s stockholders,” the complaint added.
The $44 billion deal represents a value of $54.20 per share. Twitter’s stock opened Tuesday nearly 25 percent below the deal price, at just under $41 per share.
In July, a judge granted Twitter’s request for an expedited trial in the matter.
While Twitter had asked the Delaware Court of Chancery for a late September trial, Chancellor Kathaleen St. Judge McCormick ordered a five-day trial in October. She explained that her decision was influenced by the “cloud of uncertainty” that hangs over Twitter after Musk, the world’s richest man, backed out of the deal.
Musk had requested the trial be delayed to February 2023 because of the complex nature of the situation.
McCormick said he and his attorneys underestimated the court’s ability to “quickly process complex litigation.”