Monday, August 15, 2022

Twitter likely to be the only option for Elon Musk sale as buyout financing dries up

Twitter’s agreement to sell itself to Elon Musk for $44 billion looks unsustainable — but the deal could be the struggling social network’s only option for sale as rising interest rates and falling stock prices for tech companies loom large. Beach buyout financing dries up, sources told The Post.

Private equity giant Thoma Bravo — a tech-focused firm that was previously in talks with Musk about a potential joint bid for Twitter — isn’t preparing a rival bid in the event that Musk’s $44 billion Twitter acquisition ends. It is done, said a source close to the situation.

As reported by The Post, Orlando Bravo’s firm expressed interest in buying Twitter in early April, and then later partnered with Musk in his Twitter bid.

But that was several weeks ago, and the leveraged financing market for mega buyouts has seized up, insiders said. As such, it would be nearly impossible for Thoma Bravo — or any other private-equity firm, to raise the junior financing needed to complete Twitter’s leveraged buyout, according to a lending source.

A spokesperson for Thoma Bravo declined to comment.

Analysts have speculated that Elon Musk is trying to either pull out of the deal altogether or cut the price.

Twitter told its employees this week that it is not interested in renegotiating the $54.20-share takeover agreement from Musk, who earlier this week questioned whether Twitter used a percentage of bot accounts on the social network. properly disclosed, the sources said.

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Analysts have speculated that Musk is trying to either pull out of the deal altogether or cut the price. Earlier this week, Musk’s SpaceX rocket company tendered stock to raise $1.25 billion, The Post reported. Insiders speculated that Musk may be looking to raise cash for the Twitter purchase through the deal, which could not be immediately confirmed.

Musk has been trying to raise funding to hedge his personal exposure on Twitter. Currently, it is investing $19 billion in purchases, including $4 billion of Twitter stock bought shortly before the merger agreement was reached. In April, their target was to invest less than $15 billion in aggregate, sources said.

twitter icon
Twitter is publicly saying it and its employees are not interested in renegotiating Musk’s $54.20-a-share acquisition agreement.

That $19 billion of exposure does not include the $6.25 billion that would be loaned against some of its Tesla shares.

Meanwhile, Musk has been relentlessly questioned about Twitter’s policing of spam and bots — including posting a poop emoji in response to Twitter CEO Parag Agarwal’s defense of the company’s practices earlier this week — that’s not for him. Making it difficult to find more financing in what is already a daunting task. lending market, sources said.

The second lender said, “It will be very difficult to sell the loan now as it has questioned Twitter’s user base.” “That’s undermining their finances.”

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Musk is trying to sell preferred shares in Twitter to Apollo Global Management and others to replace some of the junior debt that was arranged to finance the deal, a second lender with direct knowledge of those talks said. .

Twitter CEO Parag Agarwal
Musk posted a poop emoji earlier this week in response to Twitter CEO Parag Agarwal’s defense of the company’s methods.
Twitter/AFP via Getty Images

Morgan Stanley has committed to loan Twitter $3 billion in junior financing to support the Musk buyout. Now it probably won’t be able to resell that loan at any cost, as banks usually do, the lender said.

In response, Morgan Stanley is likely to charge Twitter the highest interest rate allowed in its Musk contract, which could amount to 12% and possibly more, the lender said.

The merger agreement expires in October and can then be extended for another six months. So if Musk refuses to execute the merger agreement, Twitter could sue him to enforce the contract next spring.

Musk also tweeted that he is still committed to the April 25 deal. While legal experts say they’re trying to quash it based on Twitter’s disclosures on bots and spam, it’s debatable whether company executives will be buoyed by lengthy litigation to enforce the terms of the deal. .


Nation World News Desk
Nation World News Desk
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