The legal team of Tesla CEO Elon Musk filed another notice on Tuesday to terminate his $44-billion deal to acquire Twitter, citing several reasons.
According to AFP, Musk has mentioned about the whistleblower in the new filing to scrap the deal. The recent filings come after Twitter’s former head of security, Peiter Zatko, alleged earlier this month "extreme, egregious deficiencies" by the social media platform related to privacy, security, and content moderation.
Musk’s legal team filed a notice with the US Securities and Exchange Commission (SEC) to terminate the Twitter deal on July 8. They alleged that Twitter has not complied with its contractual obligations. According to the follow-up notice the SEC, allegations made by Zatko as additional reasons to terminate the deal.
“Allegations regarding certain facts, known to Twitter prior to and as of July 8, 2022, but undisclosed to the Musk Parties prior to and at that time, have since come to light that provide additional and distinct bases to terminate the Merger Agreement,” Mike Ringler, Musk’s legal representative from Skadden, Arps, Slate, Meagher & Flom, wrote in a letter to Twitter’s legal chief.
Ringler said in the letter that the latest termination notice is “not legally necessary” to end the merger deal, but is being delivered in case the July 8 filing is “determined to be invalid for any reason.”
Twitter, however, said in its regulatory filing the fresh termination notice was invalid and wrongful under the deal terms.
The letter on behalf of Musk said the Zatko complaint "alleges far-reaching misconduct at Twitter, all of which was disclosed to Twitter’s directors and senior executives, including (CEO) Parag Agrawal, that is likely to have severe consequences for Twitter’s business."
According to agency reports, Musk's lawyer said Zatko alleges that Twitter is in "material noncompliance" with its obligations under its 2011 agreement with the Federal Trade Commission. The letter pointed out some of Zatko's other allegations, including claims that Twitter is "uniquely vulnerable to systemic disruption resulting from data center failures or malicious actors," something senior management knew about but "ignored and sought to obfuscate," CNBC said.
"These 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 letter stated.
Shares of Twitter were down more than 1 per cent in premarket trade on Tuesday.