Elon Musk Again Tries To Back Out Of Twitter Takeover With Second Termination Letter
Another cancellation notice has been received by Twitter (NYSE: TWTR) from Elon Musk and his firm, X Holdings I. The notice, issued yesterday, follows a notice issued on July 8 whereby Musk attempted to highlight “material breach of multiple provisions” of the previously entered merger arrangement.
This latest letter is said to have been filed on “additional bases separate and distinct from those bases set forth in the July 8, 2022 letter.” The latest claims are said to be in addition to, and not in lieu of, the prior grounds for termination believed to be available to Musk. Musk added that he views the latest letter as “not legally necessary,” because the merger was “already validly terminated.” Effectively, Musk is treating the second notice as a backup should the first letter be deemed invalid – a potential signal that he doesn’t expect to win an ongoing court battle on the matter.
Instead, Musk now outlines facts that were “known to Twitter and witheld” as his backup reason for termination. For this, he highlights recent claims by Peiter “Mudge” Zatko, the former chief security officer turned whistleblower of Twitter. In an unsurprising move, Musk has latched on to Zatko’s claims as a means of claiming that Twitter is in violation of the merger arrangement as a result of supposed material noncompliance with data privacy, unfair trade practices, and consumer protection laws. Musk also states that Twitter is “uniquely vulnerable to system disruption from data center failures,” that the platform is built on misappropriation and infringement of third party IP, and that the firm acquiesced to demands made by the Indian government.
Twitter meanwhile has already responded to the letter, indicating that the whistleblower has already been identified by the firm as having inconsistencies, inaccuracies, and a lack of important context in the claims. The firm then goes on to state that a material adverse effect has not been suffered by the company, and that it intends to continue to enforce the merger arrangement as previously agreed to.
“The Agreement is not terminated, the Bank Debt Commitment Letter and the Equity Commitment Letter remain in effect, and Twitter again demands that Mr. Musk and the other Musk Parties comply with their obligations under the Agreement, including their obligations to use their respective reasonable best efforts to consummate and make effective the transactions contemplated by the Agreement, the Bank Debt Commitment Letter, and the Equity Commitment Letter. Twitter will continue to pursue its right to specifically enforce all of the Musk Parties’ obligations under the Agreement.”
Twitter last traded at $40.04 on the NYSE.
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