Twitter said on Monday that its severance payment to a whistleblower as part of a proposed $44 billion buyout by Elon Musk just a day before a major shareholder vote did not violate any of its obligations.
Tesla CEO Musk said Friday that Twitter’s failure to seek consent before reportedly paying more than $7 million to former employee and whistleblower Peter Zatko violates the merger agreement. In an SEC filing the social media giant called Musk’s letter invalid and false.
Twitter’s response comes ahead of a big vote on Tuesday where Twitter shareholders ultimately voted to accept or reject Musk’s deal to buy the company for $54.20 per share. The company is urging shareholders to approve the purchase before promising a road-fighting-like trial in Delaware Chancery Court beginning October 17.
Wedbush analyst Daniel Ives said major approvals are expected. This is a high risk/high reward scenario for both parties after both sides step into court, with the key X variable now claiming Zatco whistleblower.
Jatko the former security chief of Twitter, has become a key player in the current fight. Last month, he documented a grievance with the SEC charging that Twitter misdirected controllers and the board about its security weaknesses and endeavors to battle spam.
Musk’s legal team made a second attempt to terminate the Twitter deal in August by filing a notice based on Jatco’s allegation. His first request was in July, alleging that Twitter did not comply with its contractual obligations. Musk also tried to extend the trial date to November but the judge denied the request.
Twitter said Monday that it intends to enforce the agreement and close the transaction at a price and terms agreed with Musk parties a phrase that is used more frequently at this point.