Elon Musk says Twitter whistleblower payment another reason to scrap deal

The $7.75m given to Peiter Zatko and his lawyers breached merger terms, he says

Elon Musk's Twitter profile is seen on a smartphone. Reuters
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Elon Musk has said that Twitter's decision to pay millions of dollars to a whistleblower it had fired gave him another justification for terminating his $44 billion agreement to buy the social media company.

In a letter to Twitter, lawyers for the world's richest person said Twitter's failure to seek his consent before paying $7.75 million to Peiter Zatko and his lawyers breached the merger agreement, which restricted when Twitter could make such payments.

The payment, which included $7m for Mr Zatko, "cannot be cured", and Mr Musk is, therefore, "not required" to complete the merger, the letter said. A copy was filed with the US Securities and Exchange Commission.

Twitter did not immediately respond to a request for comment.

It has said it was committed to completing the merger, which calls for Mr Musk to pay $54.20 per share for the San Francisco-based company. Twitter shares on Friday closed at $42.19.

Mr Zatko, known as "Mudge", had been Twitter's top security executive before being fired in January.

He later told regulators that Twitter misled them and the public about its security practices and how it fights hackers and spam.

Lawyers for Mr Musk said the severance payment was made under a June 28 separation agreement between Twitter and Mr Zatko.

Mr Musk, who also runs the electric car company, Tesla, declared the merger void 10 days later. He accused Twitter of misrepresenting the prevalence of spam or bot accounts on its platform.

Twitter rejected Mr Musk's claims and sued him to hold him to the merger, claiming he had had cold feet as geopolitical concerns and rising inflation rattled markets.

Mr Musk later countersued Twitter, and on Friday, amended his case to incorporate Mr Zatko's claims, court records show.

A trial in Delaware Chancery Court is scheduled to begin on October 17.

Updated: September 11, 2022, 8:38 AM