From the deal of the century to the real financial bubble: while Elon Musk has turned around the takeover of Twitter and should finally pocket the social network, the financiers are in the reserve.
According to Reuters, two investment funds withdrew overnight from discussions that began at the time of the Tesla kingpin’s first offensive. And they are not secondary players: With $500 billion and $60 billion in assets under management, Apollo Global Management and Sixth Street are heavyweights in New York finance.
His withdrawal underscores the difficulty that Musk will have in completing the financing of Twitter by providing fresh capital, because of its disproportionate scale: the businessman maintains his offer of 44,000 million dollars, which values Twitter stock at 54.20 dollars. But he was only at $51.30 at the latest close on Wall Street, having already jumped when the resumption of the bailout was announced (+21%).
Collapsed technology and Russian debt
In addition to equity investors, banks also had to syndicate to raise a large amount of debt: Morgan Stanley, Bank of America and Barclays will have to come up with $12.5 billion; in France, BNP Paribas and Société Générale are tied hand and foot to the tune of $1.35 billion.
Problem, it will not be easy to find this cash. The credit market has been gridlocked since the outbreak of the war in Ukraine, and investor appetite for risky debt assets is weak. However, banks already have $51 billion of “risky” commitments to place on the markets, according to Deutsche Bank.
The debt raised for Twitter will also be among the hardest to sell: tech stocks are highly volatile and down. The Nasdaq has thus lost 30% since the beginning of the year.
Last risk factor, higher interest rates mean less profitable debt for banks: so they should lose feathers in the Twitter takeover like certain funds did in the software publisher Citrix takeover. By January, financiers had lost $700 million of the $6.5 billion invested. As a market opportunity, Elon Musk’s Twitter stunt could precipitate further losses.
Source: BFM TV
