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Sept 12 (Reuters) – Twitter Inc ( TWTR.N ) said on Monday that payments made to a whistleblower did not violate any terms of its $44 billion buyout from Elon Musk, after the most world’s richest man tried to scrap the deal.
In a letter to Twitter on Friday, Musk’s lawyers said Twitter’s failure to seek his consent before paying $7.75 million to whistleblower Peiter Zatko and his lawyers violated the merger agreement, which limits when Twitter could make these payments.
Twitter lawyers responded Monday, saying Musk’s reasoning for pulling out of the deal is “invalid and unlawful.”
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Shares of the social media company fell nearly 2% to $41.37, trading well below Musk’s offer price of $54.20.
The letter to Musk’s lawyers comes ahead of a special meeting on Tuesday, where Twitter shareholders will vote on the deal. Read more
Zatko, who was fired by Twitter in January as the company’s chief security officer, last month accused the social media firm of falsely claiming it had a robust security plan and making misleading statements about its defenses against hackers and spam accounts.
Musk, who also heads electric car company Tesla Inc ( TSLA.O ), has accused Twitter of misrepresenting the prevalence of spam or bot accounts on its platform and has sought to rescind the deal on those grounds.
The whistleblower will meet with the US Senate Judiciary Committee on September 13 to discuss the allegations.
“With the Musk camp now able to include Zatko’s claims in their testimony for Delaware, tomorrow’s hearing will be closely watched on the Street,” Wedbush analysts wrote in a note.
The Twitter vs. Musk trial is scheduled to begin Oct. 17 in Delaware Court of Chancery.
Musk’s lawyers were not immediately available for comment.
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Reporting by Nivedita Balu in Bangalore; Editing by Anil D’Silva
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