Nearly two years after Elon Musk’s acquisition, X’s business is still struggling to climb out of the deep hole it fell into under his ownership.
The $13 billion that Elon Musk borrowed to buy Twitter has turned into the worst merger-finance deal for banks since the 2008-09 financial crisis.
The seven banks involved in the deal, including Morgan Stanley and Bank of America, lent the money to the billionaire’s holding company to take the social-media platform, now named X, private in October 2022. Banks that provide loans for takeovers generally sell the debt quickly to other investors to get it off their balance sheets, making money on fees.
If Musk doesn’t pay the loans the banks can take Twitter off him, but then they’re stuck with Twitter.
It’s always lost money, but now Musk has driven off the advertisers and many of the high prestige users; got stuck in a bunch of pointless lawsuits he’s going to lose; and run up a lot of debt by refusing to pay people.
And Musk knows this. The banks are fucked.
They might be stuck with Twitter, but then they could hire someone who doesn’t run off the advertisers and maybe turn it around for a smaller loss.