Elon Musk sends fresh letter to scrap US$44 billion Twitter deal after whistleblower claims

The billionaire has also subpoenaed the former hacker, known as 'Mudge'.
The billionaire has also subpoenaed the former hacker, known as 'Mudge'. Photo credit: Getty Images

Elon Musk has sent an additional letter of deal termination to Twitter to include a recent whistleblower complaint from the former security head of the social media firm as another reason to scrap the US$44 billion deal.

Last week, Peiter Zatko, a famed hacker known as 'Mudge', said in his complaint that Twitter prioritised user growth over reducing spam and falsely claimed it had a solid security plan.

If the allegations are true, then Twitter has breached some of the provisions of the merger agreement, Musk and his legal team said in a letter dated August 29.

Twitter, however, said in its regulatory filing the fresh termination notice was invalid and wrongful under the deal terms.

Musk has also subpoenaed Zatko, seeking information mostly about the way the microblogging site measures spam accounts.

Musk decided to terminate the deal in July, saying the company misled him and regulators about the true number of spam or bot accounts on the microblogging platform.

His legal team said allegations on certain facts, which were known to Twitter prior to July 8 but were not disclosed to them, provide additional and distinct bases to end the deal, according to a regulatory filing by Musk on Tuesday, US time.

The latest turn of events comes as the two sides head to a five-day trial at the Delaware Court of Chancery set to begin on October 17. Twitter is asking Chancellor Kathaleen McCormick to order Musk to buy it for the agreed US$54.20 per share.

According to legal experts it may be too late for Musk to switch gears now and come up with a new reason for voiding the deal agreement.

Twitter is likely to argue it would be unfair to allow Musk to amend his lawsuit, particularly given that Musk pushed the social media company's board to agree to the deal while skipping due diligence.

Meanwhile Musk also sought to delay the trial by about a month, until November according to the court filing.

The billionaire asked the judge to let both sides continue briefing their cases until November 10. Musk said a trial could begin later that month "subject to the court's availability".