Twitter (TWTR) denies breach of Musk deal terms in $7.75 million whistleblower payout

Ever since the deal between Elon Musk and Twitter turned sour, Musk’s lawyers have been working in a tizzy to try to get the Tesla and SpaceX CEO out of the deal, to little success. Various allegations of deal breaches have not held up, but it hasn’t kept the Musk camp from looking for a reason to get out. The latest effort comes in relation to Twitter’s severance payout to former security lead and whistleblower Peiter ‘Mudge’ Zatko, and while Musk’s representatives once again allege this was a breach of the deal, Twitter claims there was no breach and everything was handled properly.

This latest allegation and Twitter’s response was shared in a recent filing with the SEC in which Twitter responded to a third letter from Elon Musk’s lawyers demanding the deal be called off. After it came to light that Twitter whistleblower Peiter Zatko was paid around $7.75 million in severance for what Twitter called poor performance, Musk’s lawyers alleged that the severance to Zatko violated terms of the takeover agreement.

Twitter claims that its severance payout to Peiter Zatko was not a violation of the deal with Musk and that it has held up its obligations thus far.
Source: Image via SEC

In response, Twitter’s lawyers claimed that the company did not violate any of its obligations and that this letter was another wrongful attempt to void the deal.

“As was the case with both your July 8, 2022 and August 29, 2022 purported notices of termination, the purported termination set forth in your September 9, 2022 letter is invalid and wrongful under the Agreement,” Twitter’s lawyers wrote. “Twitter has breached none of its representations or obligations under the Agreement, and following the receipt of the approval of Twitter’s stockholders at its September 13, 2022 special meeting, all of the conditions precedent to the closing of the Merger will be satisfied.”

Twitter has urged its shareholders to vote in favor of the deal in the upcoming Annual Shareholder Meeting on September 13. Nonetheless, Musk’s camp has also subpoenaed Zatko to testify in the legal battle between Twitter and Musk. Stay tuned as we continue to follow this story for further updates.