A WSJ report published Tuesday describes Elon Musk's $44 billion acquisition of Twitter (now X) as the worst leveraged buyout (LBO) deal for the banks involved in it since the 2008 global financial crisis. The report cites data by PitchBook LCD showing $13 billion in loans remained unsold on the banks' balance sheets, making it the longest unsold debt financing deal on their books since the financial crisis.
X's poor financial performance has made it difficult for banks to sell the debt, leading to significant losses and write-downs.
Musk's controversial comments and actions during his ownership of Twitter have impacted the platform's brand and financial performance. Twitter is currently valued at $19 billion, less than half of what Musk paid for it, and its financial struggles persist despite Musk's efforts to revamp and cut costs.
Musk may need to sell $1 billion to $2 billion in Tesla shares to address X's financial issues.
Talks with bankers regarding restructuring the debt for Twitter have reached an impasse.
Lenders may face a $2 billion loss if Twitter cannot pay back the principal on the loans.
Despite the challenges, banks remain interested in Musk's ventures, including a potential IPO of his companies like SpaceX or Starlink.
Analysts have a Hold consensus rating on TSLA stock, with potential downside from current levels.
The disastrous outcome of Musk's ambitious social media takeover has placed bank executives under intense pressure, highlighting the risks for potential leveraged buyout investors.
Sources: Futurism, Business Insider, Gizmodo, TipRanks, Latestly, Aussiedlerbote, Evrim Ağacı, Market Research Telecast, Gigazine, Wolf Street, The Bharat Express News, SFist, BroBible.
This article was written in collaboration with Generative AI news company Alchemiq.
