Elon Musk’s Twitter Takeover Is Now the Worst Buyout for Banks Since the Financial Crisis
Elon Musk’s Twitter Takeover Is Now the Worst Buyout for Banks Since the Financial Crisis
Nearly two years after Elon Musk’s acquisition, X’s business is still struggling to climb out of the deep hole it fell into under his ownership.
The $13 billion that Elon Musk borrowed to buy Twitter has turned into the worst merger-finance deal for banks since the 2008-09 financial crisis.
The seven banks involved in the deal, including Morgan Stanley and Bank of America, lent the money to the billionaire’s holding company to take the social-media platform, now named X, private in October 2022. Banks that provide loans for takeovers generally sell the debt quickly to other investors to get it off their balance sheets, making money on fees.
The losses on banks’ balance sheets from the deal are also biting into potential bonuses for some bankers, the report said.
They should just be fired. This wasn't a deal that looked like it had good potential but didn't pan out. It was obviously a bad buy right from the start and the guy who was going to run the private enterprise was both spread too thin to run it well, was increasingly erratic in his behavior, and wasn't any good at the business he was taking over. Everyone knew it was a bad deal at the time.
Yes, but have you considered: Tesla line go up. Elon CEO. When Elon CEO, Twitter line go up. Logic.
Good fuck em. As if they totally havent made back any loss in recent years
You sweet summer child... You think this will affect anyone at the top? All the rich people will walk away unaffected as more layoffs roll down or they borrow from the gov/tax payers.
At the time, Musk himself had complained that the price for Twitter was too high, but he decided to go ahead with the deal after waffling over it for a while.
Mmmmmmmmm that’s not how I’d describe it, Marketwatch.
I mean, he did have to decide if he wanted to pay the money and take the company, or just pay the money, as he’d signed a solid agreement. So there was a choice.
In retrospect, paying the money and not taking the company might actually have been the more sound financial decision.
Guess they didn't want to say that Musk shit posted so hard that he ended up being forced to buy the company.
Morgan Stanley has another problem right now too as Their
CEOChairman is missing in that yacht sinkingWe were due for our yearly billionaire offering to Poseidon.
I don't think one is enough to placate Poseidon.
I am deep in prayers so that Poseidon, Oceanus and every other sea related deity take our offerings of other billionaires and their yachts
This one is extra sweet to me as Morgan Stanley stole $4k of my funds, claiming it was abandoned when they never once sent me a message, notification on their site, letter, or call. It took me several months to get it back. All the while I was unemployed and really needed that money.
I like this new tradition
Lmao nice.
Sounds like sacrificed a few billionaires this time.
I hope our watery god is satisfied, if not. I guess we have sacrifice a few more billionaires.
CEO or chairman?
Ah yea you’re right. Chairman but what’s the difference
Orcas are based.
Thats crazy I used IDOL for a decade. Good riddance.
Bank of America and Morgan Stanley commanded the top two spots in the U.S. leveraged-finance investment banking league tables in 2021 and 2022 during some quarters before Musk bought Twitter, according to data from Dealogic. In 2023 and 2024, JPMorgan and Goldman Sachs—which didn’t finance the Twitter deal—have held the top spots.
He's so toxic that being involved with him can unseat you from being the top two in your industry. This will make people a bit more hesitant to get into bed with him (gross) in the future.
Barclays’s top investment bankers on the mergers and acquisitions team were told at a New York dinner early last year that compensation for everyone in the room would be cut by at least 40% from the prior year. The bank had several hung deals hurting its performance but X was by far the largest, according to people familiar with the situation.
When you're slashing compensation for your people, especially the ones who bring in real money, you know it's serious. I'm happy to see X crash and burn and pull down bankers with it. Dumbass mf.
No single human should have this much control over our economy.
Sounds like a they problem.
A problem partially funded by my mortgage 🙃
They are too big to fail?
Yep, if you own a bank 10 thousand dollars, thats a you problem. If you owe a band 10 billion dollars, thats a them problem.
Isn't the difference here that Musk has a tremendous amount of assets in the form of Tesla stock that can be used to repay the debt? It's not like he can declare bankruptcy and stiff them on the bill.
The thing is, selling off the amount of Tesla stock that he’d need to to pay off the debt would cause Tesla stock to plummet, leaving him significantly less wealthy and putting Tesla in danger. So even though he technically has the money to pay them, he functionally doesn’t.
He both technically and functionally does have the ability to repay them, which he will find out soon if he doesn't restructure the debt, and implying this is in anyway similar to the financial crisis is absurd clickbait.
It could possibly tank Tesla and make Elon less rich if he had to pay his debt. Oh no. As if Tesla being valued at more than 9 major other automakers combined isn't outlandish in the first place.
But won't someone please think of the oligarch and his shareholders! 🙄
No debt holder is obliged to consider the reprecussions of collecting their debt, just look at house foreclosure. The wellbeing of a thrid party company has no bearing on the ability to pay back a debt, and there are stock sell off plans that facilitate large liquidation over a period of time to ameliorate the stock price drop and prevent it from a full crash. Anyone who tells you otherwise is simply licking billionaire boots.
Does the stock necessarily get liquidated for these sorts of transactions though?
Obviously if I owe the bank $100, they will want that in cash, not in $SPY or whatever. But for the Twitter levels of debt could stock just be transferred without being sold first? (Not a rhetorical question, I don't know how this works.)
Oh, so he gets to be treated like the rest of us now....right?
If I stopped paying my mortgage, regardless of how bad off I may be, the bank is taking my house.
Guess he should've been more responsible, not eaten avocado toast, and saved more or whatever the fuck conservatives say to struggling millennials and younger folks.
My understanding is the money he used to pay for Twitter was from loans by banks, where they got mostly Tesla stock as collateral. Musk can pay back the loan to get the stock back, or the banks can sell it. This is done because loans aren't taxed, but selling the stock would be. Now the banks are stuck with stocks that are worth less than the loans they gave out, so they are at a loss.
AFAIK that was the original plan, but wasn't the final outcome.
Elon doesn't have anything tying up his stock on the purchase anymore. It's one of the reasons for why he sold so much when he did the purchase.
He may still have to sell stock to keep it alive, but it's not collateral.
edit: Here's when the change happened
https://www.theverge.com/2022/5/25/23141940/elon-musk-tesla-twitter-margin-loan-buyout-deal
After a brutal month for Tesla stock, Elon Musk will no longer fund his Twitter buyout by borrowing against his Tesla ownership stake.
In a filing with the US Securities and Exchange Commission, Musk announced the expiration of a series of margin loans against Tesla stock, which had been included as part of his original financing plan to acquire Twitter. As part of the announcement, Musk committed to providing an additional $6.25 billion in equity financing, bringing his total commitment to $33.5 billion.
Just to reiterate what I said above though, he still has loans, they just aren't collateralized by Tesla. He could lose twitter if he doesn't pay the loans, and the only way he can pay them is either twitter making money, selling or collateralizing tesla/spacex shares, or finding additional funding.
I'm guessing here, I don't think Musk, the person, took out the loans, I think xitter did. So if xitter defaults, Musk's assets aren't on the line.
Edit for clarity: 'leveraged buyout with debt reassignment post acquisition'
I'm pretty sure they lent him $12B and he largely put up the remaining $30B.
No Musk had to take the loans out in order to buy Twitter and turn it into the shit hole that is xitter. Now whether or not they are personal loans or he bought them under another company he owns, that's a different question.
Marketwatch link that isn’t paywalled:
I can see a very real scenario where Drump gets elected, appoints Moron Musk as treasury secretary, and magically wipes off his Xitter debt never to be heard again
I'd say he can't do that (the debt part) but apparently the US supreme court thinks a president can do whatever the fuck they want, so who knows at this point.
okay but he blames advertisers for ruining the company
Narcissists will never blame themselves for their screw ups.
that is awesome
OP did you forget to link the article?
Huh, that’s strange. Let me put it up now; thanks!
Cheers!
Needed to unpaywall it, so here's an archive link for anyone who needs the same: https://archive.is/hokvj
Edit: hmm there isn't actually much more there
Morgan Stanley and BOA will find ever bigger suckers to sell those loans to once they've had a chance to repackage them.
It is long past time we got over our child-like worship of billionaires.
We'll never get over our worship of them, because it is engineered.
The media machines they own, including every market news site, fills every stream with deceptive articles of the 8 things billionaires do that made them rich and the 7 the plebs do that stop them from being billionaires, constantly defying them while shaming you for not being like or serving them better.
The natural state for any society where the elites live large while the masses struggle to survive is to DESPISE the elites, whether violent recourse would be suicide or not.
The love/deification for our elites by many of those they oppress is part of their engineered propaganda to keep it that way with their bully pulpit artificially, and that pulpit is more than loud enough to drown out and ruin the credibility of any prominent voices of reason. Easier for them to maintain the market capitalist machine like this than through overt slavery, they just convince the masses it's in their interests to self-enslave.
This is why I stick with credit unions.
This makes me happy.
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