Everybody knew Elon Musk was overpaying for Twitter when he bought the social media platform back in 2022. That’s exactly why the billionaire tried to back out of the deal earlier than being pressured to finalize the acquisition after a courtroom order. However we’re now studying extra particulars about simply how dumb shopping for Twitter was in monetary phrases, in line with a report from the Wall Street Journal Tuesday. Apparently, it was the worst deal for the reason that world monetary disaster in 2008.
Seven banks loaned Elon Musk cash totaling $13 billion in 2022 to assist him purchase Twitter, now recognized by the obnoxiously generic identify X, and each single one has been unable to dump the debt with out incurring “main losses” from the deal, in line with the Wall Avenue Journal. This implies the loans are simply sitting on the stability sheets of those banks. In truth, the Journal explains that this wasn’t simply one of many worst offers since 2008, it’s one of many worst offers of all time.
Musk and different traders introduced roughly $30 billion in money to the desk, whereas the banks equipped the opposite $13 billion to finalize the acquisition. However we now know the individuals who work at these banks have felt appreciable monetary ache from agreeing to one thing so silly. How a lot ache? Because the Journal tells it, high funding bankers at Barclays had been instructed at a dinner in late 2023 that everybody can be getting not less than a 40% pay reduce. After everybody acquired their bonuses for the yr, about 50 of the corporate’s 200 administrators left, in line with the Journal.
Each financial institution within the deal, together with Morgan Stanley, Financial institution of America, Barclays, Mitsubishi UFJ Monetary Group, BNP Paribas, Mizuho, and Société Générale, have been scuffling with this hanging on their books. And talks about restructuring the deal haven’t been fruitful, in line with the Journal. As numerous journalists at locations like Bloomberg have beforehand identified, those self same banks need to have entry to something Musk could also be cooking up sooner or later, together with a attainable IPO of SpaceX, arguably the neatest factor the billionaire ever based. SpaceX is a powerhouse in industrial house and advantages tremendously from authorities contracts. Starlink, the satellite tv for pc web arm of SpaceX, could even be spun off and will see its personal IPO sooner or later. And the hype round all of that places these banks in a tough place as Musk continues to harm their monetary positions together with his dumb Twitter buy.
X is presently valued at roughly $19 billion, lower than half what Musk paid for it. And but Musk has maintained a repute amongst among the dumbest those that he’s nonetheless a genius. The tech oligarch stays surrounded by a bubble of sycophants on X continuously telling him what an incredible particular person he’s. Your entire spectacle is probably going an indication of the first cause he purchased the location. Musk purchased himself a protected house the place everybody is consistently telling him he’s a genius. And that’s price some huge cash to one of many wealthiest males on this planet.
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