Twitter shareholders approve sale to Elon Musk bringing $65 billion court showdown closer
The Tesla founder is desperate to back away from a multi-billion agreement but it’s proving increasingly difficult with a court showdown now inevitable.
Elon Musk may be keen to walk away from his A$65 billion deal to buy Twitter, but the social media firm is no mood to make it easy for him.
On Tuesday, US time, Twitter shareholders voted to approve the US$44bn sale of the tech firm to Mr Musk.
It puts further pressure on the Tesla founder who agreed to buy Twitter in April.
But the shareholder approval came on an otherwise bruising day for Twitter with an ex senior employee telling US politicians that the firm’s security was lax and it wasn’t doing enough to root out foreign spies from within its ranks.
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Twitter shareholders approve Musk deal
Under the terms of the sale agreement, Mr Musk committed to paying Twitter US$1 billion if he reneged on the deal.
Twitter, which has seen its share price fall since Mr Musk originally said he wanted out in July, wants to hold him to the deal as it now means shareholders will get an even better return.
If the deal goes through, Twitter shareholders will get US$54.20 per share, as opposed to the current share price of US$41.75.
The approval of the deal by Twitter shareholders sets up a court showdown with Mr Musk which is due to start next month.
Twitter has said it has met all the requirements of the deal as laid out in the agreement, so it’s full steam ahead.
Mr Musk has said he no longer wants to buy Twitter because, he has claimed, there are far more fake accounts on the platform than the 5 per cent Twitter has admitted to.
Whistleblower at heart of Musk case
Late last week, Mr Musk sent a third letter to Twitter asking for the deal to be scrapped.
Musk is basing his current arguments on a US$7 million settlement Twitter gave to Peiter “Mudge” Zatko who was Twitter’s head of security until his sacking in January.
The firm said his departure was performance related but Mr Zatko said it came after he blew the whistle about Twitter’s security.
Mr Zatko said Twitter had failed to adhere to a deal with US authorities to plug security gaps that had led to hacks. He said the company’s servers were at risk of security breaches as were the accounts of some of its most high profile users.
He also said there was not enough done to crack down on spam and fake accounts – which is central to Mr Musk’s arguments that he should be allowed to back away from the deal.
Mr Musk’s letter to Twitter says the compensation payment to Mr Zatko was in violation of the acquisition agreement which said that no extraordinary severance payments should be made to employees.
But Twitter was having none of it, stating the latest attempt to call off the sale was “invalid and wrong”.
The company said the claims by Mr Zatko were “riddled with inconsistencies and inaccuracies and lack important context”.
“Mr Zatko’s allegations and opportunistic timing appear designed to capture attention and inflict harm on Twitter, its customers and its shareholders,” it said last month.
Twitter’s announcement that the deal had been approved came in the middle of Mr Zatko giving testimony before a US Senate committee.
He told politicians Twitter’s security was “over a decade behind” the industry standard when he joined the company.
He also said the Twitter was “unwilling to put the effort in” to finding and expelling possible foreign agents on its payroll.
There are concerns that if spies were within the company, critics of harsh overseas regimes could be identified and located.
Twitter hasn’t yet commented on Mr Zatko’s Senate testimony.
During the hearing, Mr Musk tweeted a popcorn emoji indicating he was intently listening along.
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— Naughtius Maximus (@elonmusk) September 13, 2022
The case between Musk and Twitter – which will decide whether or not the deal goes ahead – will begin on October 17.
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