Elon Musk says whistle-blower deal lets him drop Twitter purchase

Twitter representatives didn't immediately respond to an emailed request for comment. PHOTO: REUTERS

NEW YORK - Elon Musk told Twitter Inc. that a US$7 million (S$9.8 million) severance payment to a whistle-blower who raised questions about problems at the company gives him another reason to walk away from his US$44 billion purchase of the social media platform.

Mr Musk is trying to terminate his acquisition of Twitter after claiming the platform misled him and investors about the number of spam and bot accounts among its more than 230 million users. Twitter counters that Mr Musk's bot concerns are a pretext to get out of a deal in which the world's richest person allegedly developed buyer's remorse.

Mr Musk's lawyers, in a filing on Friday, said as part of the purchase deal, Twitter needed to notify the billionaire before it spent US$7.75 million in a separation agreement on June 28 with Mr Peiter Zatko, the company's former security chief. Mr Musk's lawyers said they learned of Mr Zatko's agreement on Sept 3 when Twitter filed paperwork in court.

Mr Zatko is scheduled to testify before a US Senate committee next week on his concerns about lax security, privacy issues and the number of bots on the platform. He has been subpoenaed to testify in the Twitter lawsuit, as well.

Both sides are gearing up for an October trial of Twitter's lawsuit to force Mr Musk to consummate the deal. Delaware Chancery Judge Kathaleen St. Jude McCormick on Wednesday approved Mr Musk's request to add Mr Zatko's allegations to his counterclaims. But she denied his bid to delay the trial.

Twitter representatives didn't immediately respond to an emailed request for comment.

It's the third time Mr Musk has told Twitter officials he's withdrawing his US$54.20-per-share bid for the platform because of violations of the buyout agreement covering the transactions.

"This severance payment violated" the requirement that Twitter executives run the company "in the ordinary course of business" while the legal dispute over Mr Musk's efforts to torpedo the deal are hashed out. BLOOMBERG

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