Musk ditches Twitter deal, triggering defiant response

Twitter's board vowed to sue Elon Musk to have him follow through on the $44 billion deal he inked to by the San Francisco-based tech firm.

Elon Musk backing out of his deal to buy Twitter sets the stage for litigation over a $1 billion breakup fee as well as harm done to Twitter's reputation and share price.

Elon Musk on Friday pulled the plug on his $44 billion deal to buy Twitter, accusing the social media giant of "misleading" statements about the number of fake accounts, a regulatory filing showed.

Musk's effort to terminate the deal that he inked in April sets the stage for an epic court battle over a billion-dollar breakup fee and more.

Musk's change of heart appeared to suggest some "buyer's remorse" for offering a price of $54.20 per share that now appears "laughable," CFRA Research senior equity analyst Angelo Zino said in a note to investors before the deal was officially nixed.

Immediately after the news broke, Twitter board chair Bret Taylor vowed to sue Musk to hold him to the terms of the buyout deal, saying "we are confident we will prevail."

Musk -- the world's richest man -- used a chunk of his fortune in Tesla shares to back loans to buy Twitter, but the tumult and market factors have pushed down the electric car maker's stock price.

"This soap opera has seen many twists and turns... this was always a head scratcher to go after Twitter at a $44 billion price tag for Musk and never made much sense to (Wall) Street, now it ends in a Twilight Zone."

Concerns about Tesla included worries that its chief executive was being distracted by the Twitter saga, and that the tech platform would certainly demand his attention if he owned it.

"His erratic behavior obviously affected the price of Tesla shares, which undermined the financing everything was set on."

His comments came during an annual event at which Twitter and other social media companies typically lock in bulk ad contracts worth hundreds of millions of dollars.

"Musk couldn't control himself long enough," Carusone said. "He opened his mouth and pushed the first domino that has cascaded into blowing up the deal."

Twitter shares jumped to $51.70 in April when Musk's deal was announced, only to plunge to $35.76 a month later as his commitment came into doubt. Twitter was priced at just below $37 a share in after-market trades on Friday.

"They got into bed with a madman and significantly harmed shareholder value as a result," he said.

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