Getting their money back? Don't bank on it.

Major Hang-Up

Elon Musk's takeover of Twitter has proved so disastrous that it's resulted in the worst merger-finance deal for banks since the 2008 to 2009 financial crisis, The Wall Street Journal reports.

Typically, banks that lend money for takeovers try to quickly sell the debt to other investors so they can get it off their balance sheets.

But things haven't worked out that way for Morgan Stanley, Bank of America, Barclays, and the four other large banks that collectively lent Musk $13 billion for his buyout of Twitter — now renamed X — in October 2022.

That's because Twitter's financials have performed so poorly that they haven't been able to find anyone willing to buy the debt, leaving them with some of the worst "hung" loans — meaning they can't be offloaded — of all time.

Using data from PitchBook LCD, the WSJ found that the loans Musk received for his Twitter buyout "have been hung longer than every similar unsold deal since the 2008-09 financial crisis for which the research firm has complete records" — a testament to how uniquely poor the billionaire's stewardship of the platform has been.

Musk Masterclass

Since Musk took over the social media site, Twitter's value has plunged by nearly three quarters — from the $44 billion he originally paid for it down to around $12.5 billion. Some of that may be due to Musk's behavior on the platform, as well as his changes to many of the site's functions that are blamed for driving off users.

But his reign has also caused an exodus of advertisers, whose ad spots were a key source of revenue for the website, which even before changing hands had always struggled to turn a profit.

After these advertisers started leaving in droves, Musk told them to "go fuck themselves." He's now suing a group of them for leaving as instructed, claiming they orchestrated an illegal boycott of the site.

Color of Money

None of this hot headed decision-making has been particularly comforting to the banks, which have been stuck with the massive debt for nearly two years now, affecting their ability to lend money for other mergers.

Though they're receiving interest payments on the loans, some are so desperate to offload that they've marked the loans down by hundreds of millions of dollars, according to the WSJ.

The disastrous deal has also hurt the banks' position on the global stage. Per the report, Bank of America and Morgan Stanley both lost their top two spots in the banking league tables to JP Morgan and Goldman Sachs, which didn't loan Musk money for the Twitter takeover.

Some bigwigs at the financial institutions have been personally affected by the deal, too. Top investment bankers at Barclays, for example, were told last year that their pay would be cut by at least 40 percent from the year prior. And to them, we'll whip out an exceedingly small violin, because even before the Twitter deal went through, it was already clear that this was going to be an ill-advised gamble.

More on Twitter: Elon Musk May Have to Sell Tesla Stock to Prop Up Dying Twitter


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