Elon Musk's $13 billion fundraising to buy Twitter is the worst deal for banks since the financial crisis

Elon Musk, who acquired Twitter (now X) in October 2022, raised $44 billion (about 6.4 trillion yen) for the acquisition, of which $13 billion (about 1.9 trillion yen) was borrowed from major US banks such as Morgan Stanley and Bank of America. However, the Wall Street Journal reports that for the banks, this transaction was the worst acquisition financing transaction since the 2008-2009 financial crisis.

Elon Musk's Twitter Takeover Is Now the Worst Buyout for Banks Since the Financial Crisis - WSJ
https://www.wsj.com/tech/elon-musks-twitter-takeover-is-now-the-worst-buyout-for-banks-since-the-financial-crisis-3f4272cb

The banks that loaned Musk $13B to buy Twitter might be having regrets | TechCrunch
https://techcrunch.com/2024/08/20/the-banks-that-loaned-musk-13b-to-buy-twitter-might-be-having-regrets/

Musk acquired Twitter in October 2022 to ' protect freedom of speech .' The acquisition price is said to be $44 billion , with $13 billion raised from major American banks in addition to investors.

Elon Musk raises 6 trillion yen to acquire Twitter, declares that 'if the acquisition is successful, we will eliminate spam bots' - GIGAZINE

When banks lend money to fund an acquisition, they typically earn a transaction fee by selling the loan to another company. But X's weak finances mean it can't sell the loan, creating a massive hung deal , The Wall Street Journal reported.

The Wall Street Journal points out that the reason the banks lent X $13 billion in acquisition funds was because 'the fact that the bank was lending to the world's richest man was too attractive.' However, if X had not been able to withdraw interest payments at the time of writing and could not withdraw the principal repayment at the maturity of the loan, the deal would have been a big mistake.

Since acquiring Twitter, Musk has sold $3.6 billion worth of Tesla stock to cover the company's losses.

Elon Musk sells Tesla shares worth about 495 billion yen to cover Twitter's losses, the fourth time since announcing the Twitter acquisition - GIGAZINE

It was also reported that X's valuation had fallen to $15 billion, just one-third of the $44 billion Musk paid for the acquisition.

Twitter's value has plummeted to just one-third of what Elon Musk paid for it - GIGAZINE