Twitter (TWTR) shares moved lower Tuesday as it traded jabs with Elon Musk amid the Tesla (TSLA) CEO's attempt to scrap his $44 billion takeover of the social media group.
Musk delivered a new 'termination notice' to Twitter late Monday following his move to subpoena the group's former security chief, Peiter Zatko, after he made allegations last week linked to insufficient oversight and a focus on profits that allowed spam accounts to proliferate on the micro-blogging platform.
Zatko said the group made false claims about its online defenses and prioritized user growth over spam reduction in papers made available to Congress last week. Zatko, who is also know in the hacking community as 'Mudge', first provided details of his allegations last month to the U.S. Securities and Exchange Commission, the Department of Justice and the Federal Trade Commission.
"Allegations regarding certain facts, known to Twitter prior to and as of July 8, 2022, but undisclosed to the Musk Parties prior to and at that time, have since come to light that provide additional and distinct bases to terminate the merger agreement," Musk's lawyers wrote.
Twitter shot back Tuesday, saying it intends to enforce Musk's pledge to pay $54.20 per share for the group, calling the Tesla CEO's letter "invalid and wrongful" under terms of the takeover agreement.
Musk's termination letter is "based solely on statements made by a third party that, as Twitter has previously stated, are riddled with inconsistencies and inaccuracies and lack important context," Twitter said in its reply.
"Contrary to the assertions in your letter, Twitter has breached none of its representations or obligations under the agreement, and Twitter has not suffered and is not likely to suffer a company material adverse effect," the reply continued. "Twitter intends to enforce the agreement and close the transaction on the price and terms agreed upon with the Musk Parties."
Twitter shares were marked 1.1% lower in early Tuesday trading following news of its response to Musk's letter to change hands at $39.54 each.
Musk has been locked in public dispute with Twitter since early July over the amount of so-called "fake" or "bot" accounts on the social media platform, which he says constitute a material change to the merger terms he agreed in the spring.
Twitter, for its part, is suing Musk to force him to purchase the group for $44 billion, or $54.20 per share, arguing in court papers published last week that the idea of a "billionaire founder of multiple companies, advised by Wall Street bankers and lawyers" was "hoodwinked into signing a $44 billion merger agreement" is "as implausible and contrary to fact as it sounds".
Musk and Twitter will face each other in a Delaware court on October 17.
