Musk-Twitter, in just two years the value of the social network has more than halved: a flop for the banks that lent the money
Elon Musk he bought Twitter in April 2022 for 44 billionbut now the value of X (new name of the social network) is down to 19 billion: more than halved in just two years. A resounding flop from a financial point of view for the moment, but it was not only the owner of Tesla who lost out but also the banks that supported this operation. 13 billion dollarsin fact, that Musk borrowed to buy Twitter have turned into the worst bank-financed M&A deal from the economic crisis of 2008-2009. The value of Musk’s loans rapidly deteriorated after the $44 billion acquisition was completed.
According to data from PitchBook Lcd– writes The Wall Street Journal – Twitter’s loans have remained on hold longer than all similar deals left unsold since the 2008-2009 financial crisis for which the research firm has complete records. Generally – reports Milano Finanza citing an analysis by the WSJ – in this type of deal, Financial institutions earn on commissions quickly reselling the debt to other investors. But this time it didn’t go that way..
Due to the weak financial performance of X, banks have been unable to sell off debt without incurring large losses. The resulting write-downs have weakened the institutions’ loan portfolios and, in one case, have been a factor that has reduced the compensations for a bank’s merger department. Steven Kaplan, a finance professor at the University of Chicago who has followed these types of deals since the 1980s, said Twitter is not only the largest dollar deal since the 2008 financial crisis, but one of the greatest of all time”.
“The loans,” Kaplan continued, “have weighed on banks for much longer than other suspended operations we’ve seen.” Only one operation (a $20 billion acquisition (entirely in debt in 2007) was larger than Twitter, but it is went bankrupt about 12 months later that the banks had cut the check.
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