Twitter calls Musk's new argument for terminating merger "invalid"
Twitter on Monday rejected a new argument made in a letter sent by Elon Musk's lawyers to the social giant on Friday that alleged it violated its merger agreement by paying $7.75 million in severance costs to its former security chief.
Why it matters: It's the third argument and counter-argument made by Musk and Twitter over whether Musk legally has the right to terminate his $44 billion deal to buy Twitter.
- On July 8, Musk filed his first termination letter, arguing Twitter hasn't met its contractual obligations in providing data to Musk about the number of spam and bot accounts on its platform.
- On Aug. 29, he filed a second termination letter, citing recent allegations made Twitter's former security chief via whistleblower interviews and regulatory filings about the company's security practices.
Details: In a regulatory filing Friday, Musk's lawyers argued that the merger agreement is invalid because Twitter made severance payments to its former security chief, who has since come forward as a whistleblower against the company when it fired him in January.
- Musk's lawyers cite a provision in the merger agreement that says Twitter agreed that between signing and closing the deal, it would not "except as required pursuant to existing Company Benefit Plans" grant or provide any "severance or termination payments or benefits" to any "Company Service Provider" outside of the normal course of business. Musk's lawyers argue the definition of "Company Service Provider" includes Twitter's former employees.
- In response, Twitter said: "As was the case with each of the assertions in Mr. Musk’s two prior purported termination letters and continuing with the third attempt, Twitter has breached none of its representations or obligations under the Agreement."
- "We intend to enforce the Agreement and close the transaction on the price and terms agreed upon with Mr. Musk. In the meantime, Mr. Musk and related parties continue to knowingly, intentionally, willfully and materially breach the Agreement."
What's next: Twitter's shareholders are set to vote tomorrow on Musk's takeover bid. Twitter's former security chief is also expected to testify before Congress tomorrow.
Go deeper: Twitter vs. Musk timeline