There have been thousands of corporate buyouts in the 14 years since the 2008 banking crisis. And, according to the banks holding the loans, none of them have been worse than Elon Musk’s takeover of Twitter. 

A report from the Wall Street Journal indicates that approximately $13 billion in loans used in the purchase of Twitter (now X) are stuck on banks’ balance sheets.

The typical practice for this type of debt financing is for banks to sell that debt to other investors. Since X is a private company, this practice allows investors who weren’t involved in the initial financing phase to become stakeholders.

Twitter to X

When Musk purchased Twitter, the company was valued at approximately $38 billion. This made his $44 billion offer a bit excessive from a pure numbers perspective. At its peak, however, in 2020 (two years prior to Musk’s takeover) the company had reached a valuation of around $62 billion.

Today, because the company is private, X isn’t required to report its revenues. This makes it difficult to tell what the company’s value would be relative to what Musk paid for it. However, the company claimed in Q4 of 2023 that it was worth about $19 billion while analysts at Fidelity said in January of 2024 that it was closer to $12.5 billion.

Hung loans

The banks holding the bulk of the loans, which include Morgan Stanley and Bank of America, have seen their values plummet as X continues to struggle with revenue.

While these banks still receive interest payments, and thus the loans aren’t necessarily losses, they’re essentially albatrosses hanging on bank’s balance sheets.

Barclays, one of the banks with hung loans associated with Musk’s Twitter takeover, even cut employee salaries.

Per the Journal, bankers on the mergers and acquisitions team were given a 40% pay cut with “several hung deals” cited as the reason, “but X was by far the largest.”

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