Stopthatgirl7

Elon Musk’s Twitter Takeover Is Now the Worst Buyout for Banks Since the Financial Crisis

https://lemmy.world/post/18877132

Elon Musk’s Twitter Takeover Is Now the Worst Buyout for Banks Since the Financial Crisis - Lemmy.World

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 [https://www.wsj.com/topics/person/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 [safari-reader://www.wsj.com/market-data/quotes/MS] and Bank of America [safari-reader://www.wsj.com/market-data/quotes/BAC], 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.

Aug 20, 2024 at 11:31pmWeb
Show threadMayor PoopingtonAug 21, 2024
Guess the saying is true, if you owe the bank $1000, that’s your problem. If you owe the bank $13 billion, its the bank’s problem.
Show threadryan213Aug 21, 2024
Hmm… How do I get them to lend me $13B??
Show threadbradorsomethingAug 21, 2024
The key is to have $60 billion.
Show threadMayor PoopingtonAug 21, 2024
  • Be rich
  • Don’t be poor
    • Show threadSamvegaAug 21, 2024
    Align with the value of international finance, e.g. think that the poor exist to be exploited for greater inequality.
    Show threadVoroxpeteAug 21, 2024
    They already covered that with 1. And 2.
    Show threadSamvegaAug 21, 2024
  • Be rich and get richer
  • Don’t be poor and punish the poor for being poor
    • Show threadI Cast FistAug 21, 2024
    Shit, best I can do is be poor and punish other poors for being poor
    Show threadsome_guyAug 21, 2024
    archive.is/jSzWN
    Show threadSpitzspotAug 21, 2024
    This makes me happy.
    Show threadsome_guyAug 21, 2024

    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.

    Show threadOptionalAug 21, 2024

    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.

    Show threadbradorsomethingAug 21, 2024
    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.
    Show threadconfused_code_monkeyAug 21, 2024
    “since the financial crisis” - You’ll have to be more specific than that 🥲
    Show threadtiredofsametabAug 21, 2024
    Circa 1177 BCE. Sea Peoples ruin everything.
    Show threadFlying SquidAug 21, 2024
    Now now… I agree that the Peleset are all awful, but what have the Weshesh ever done to you?
    Show threadblindbunnyAug 21, 2024
    No single human should have this much control over our economy.
    Show threadHootinNHollerinAug 21, 2024
    Morgan Stanley has another problem right now too as Their CEO is missing in that yacht sinking
    Sicily yacht sinking: Morgan Stanley boss Jonathan Bloomer among missing

    Jonathan Bloomer is one of the six people missing after Monday's disaster, Sicily's Civil Protection says.

    Show threadMikeliusAug 21, 2024
    We were due for our yearly billionaire offering to Poseidon.
    Show threadOsitoAug 21, 2024
    May the god of water take mercy on us with this wealthy sacrifice and place a harvest in our nets
    Show threadAqariusAug 21, 2024
    And hold back sea level rise!
    Show threadvaultdweller013Aug 21, 2024
    Either that or Jörmungandr has aquired a taste for richness. As a man who likes cheesecake I can respect it.
    Show threadAngryCommieKenderAug 21, 2024
    My most requested recipe is: New York Style Cheesecake Stuffed, Chocolate covered, graham cracker rolled, strawberries.
    Show threadvaultdweller013Aug 21, 2024
    That sounds great minus the strawberries, add more chocolate instead.
    Show threadAngryCommieKenderAug 21, 2024
    The strawberries make it a “healthy dessert.”
    Show threadvaultdweller013Aug 21, 2024
    Bite me I want more chocolate, also if it can give me cavities it prolly aint healthy.
    Show threadAngryCommieKenderAug 21, 2024
    You probably don’t taste as good as the cheesecake and strawberries. I’ll bite them, thanks. Cheers m8 :)
    Show threadvaultdweller013Aug 21, 2024
    If I taste as I smell then I taste like motor oil, old metal, and oranges. Which is fucken bizarre and I dont know what thatd taste like.
    Show threadI Cast FistAug 21, 2024
    I am deep in prayers so that Poseidon, Oceanus and every other sea related deity take our offerings of other billionaires and their yachts
    Show threadphoneymouseAug 21, 2024
    CEO or chairman?
    Show threadWoahWoahAug 21, 2024
    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.
    Show threadStopthatgirl7Aug 21, 2024
    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.
    Show threadValmondAug 21, 2024
    Of course he can, it would just inconvenience him.
    Show threadStopthatgirl7Aug 21, 2024
    Does he seem for even a split second like someone who can handle being temporarily inconvenienced?
    Show threadValmondAug 22, 2024
    Fair enough😂
    Show threadCethinAug 21, 2024
    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.
    Show threadNotMyOldRedditNameAug 21, 2024

    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

    theverge.com/…/elon-musk-tesla-twitter-margin-loa…

    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.

    Elon Musk will put up $6 billion to drop Tesla loans from his Twitter deal

    The Tesla CEO had initially financed his bid to take Twitter private with $12.5 billion in loans against his ownership stake in Tesla, the popular manufacturer of electric cars.

    The Verge
    Show threadOhNoMoreLemmyAug 22, 2024

    If Musk doesn’t pay the loans the banks can take Twitter off him, but then they’re stuck with Twitter.

    It’s always lost money, but now Musk has driven off the advertisers and many of the high prestige users; got stuck in a bunch of pointless lawsuits he’s going to lose; and run up a lot of debt by refusing to pay people.

    And Musk knows this. The banks are fucked.

    Show threadyamaniiAug 21, 2024
    Sounds like a they problem.
    Show threadValmondAug 21, 2024
    They are too big to fail?