Twitter shareholders approve Elon Musk takeover deal as trial looms
Whether the buyout goes ahead will depend on the outcome of the social media company’s lawsuit against the Tesla founder, the hearings for which are scheduled to start in mid-October
A majority of Twitter’s shareholders have voted in favor of the social media company’s $44 billion sale to Elon Musk, the founder of Tesla and SpaceX. The deadline for the shareholder vote on the deal is Tuesday, but enough investors had voted by Monday evening for the outcome to be certain, people familiar, who requested anonymity, told Reuters. The company will announce the results during a special meeting on Tuesday.
But whether the deal goes ahead depends on the outcome of Twitter’s lawsuit against Musk. The richest man in the world backed down from the buyout deal, claiming Twitter failed to provide sufficient information and breached its agreement by firing top managers and laying off workers. But Twitter argues that Musk decided to back out after realizing that his offer of $54.20 per share was too high, especially after the stock market dropped sharply. Twitter shares are currently trading at around $41.
In July, Musk said he was terminating the deal to buy Twitter because the social media company had failed or refused to respond to multiple requests for information on fake or spam accounts on the platform, which is fundamental to the company’s business performance. Musk’s counterclaim to Twitter’s lawsuit raised further allegations, but many were contradictory in places.
At the end of August, Musk turned his attention to Peiter “Mudge” Zatko, a legendary hacker hired by Twitter to handle security, who was fired after just 15 months. In a complaint filed with regulators in July, Zatko argued Twitter had made “little meaningful progress on basic security, integrity and privacy systems,” and accused the social media company of “extreme, egregious deficiencies” in its handling of user information and spam bots.
After learning that Twitter had agreed to pay Zatko $7.75 million in severance pay, Musk’s lawyers sent another termination notice on September 9. This followed two earlier letters, sent on July 8 and August 29. Although the billionaire’s legal team said the missives contained additional arguments, analysts say it suggested the team’s initial allegations were not substantial enough.
In the third notice, Musk’s lawyers argued that Twitter should have obtained his consent before signing off on the severance package, and that not having done so now allows him to break the agreement. In a filing, Twitter’s lawyers responded that Musk’s termination notice was “invalid and wrong under the agreement,” and said his team continue to “knowingly, intentionally, willfully and materially breach” the deal.
A Delaware judge ruled last week that Musk may include Zatko’s whistleblower claims in his case against Twitter, but denied his request to delay the trial until November. “The longer the delay until trial, the greater the risk of irreparable harm to Twitter,” said Chancellor Kathaleen McCormick. The first hearings are scheduled to start in mid-October.