Lawyers for Elon Musk said on Friday that Twitter’s severance payments to a former employee violate the merger agreement.
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CEO Elon Musk said late Friday that Musk has new reason to cancel his merger agreement with
In a letter to Twitter (ticker: TWTR), the lawyers wrote that the social media company’s recent severance payments to a former employee, Peiter Zatko, violate the merger agreement.
Musk has already sent previous letters arguing that the deal has been terminated, a dispute that is set to be argued in Delaware Chancery Court in October.
Now, Musk’s lawyers say they have another reason to cancel the deal.
The letter says that the severance to Zatko, totaling $7.5 million, violates a portion of the merger agreement that prohibited certain termination and severance payments between “signing and closing” of the deal.
“This severance payment violated Section 6.1(e) and cannot be cured,” Musk’s lawyers write.
A Securities and Exchange Commission filing containing the letter said the severance payments serve as a “separate and distinct” basis for terminating the merger.
“Because Twitter has taken the position that the Merger Agreement remains in effect, the Musk Parties hereby provide this additional notice of termination of the Merger Agreement,” the letter states.
Twitter didn’t immediately respond to a request for comment.
Zatko, Twitter’s former security chief, has become an important player in the ongoing battle between Musk and Twitter after he filed a whistleblower complaint with the SEC alleging that Twitter had misled regulators and the company’s board about its security vulnerabilities and its efforts to fight spam.
A Delaware Chancery judge recently ruled that Musk could include the complaint in his countersuit against Twitter seeking to terminate the deal. The court rejected Musk’s request to push the trial from October to November.
Twitter shares were down 1.1% in late trading Friday evening.
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