Twitter’s agreement to sell itself for $44 billion to Elon Musk looks shaky — however the deal stands out as the struggling social network’s only option for a sale as buyout financing dries up amid soaring rates of interest and crashing stock prices for tech firms, sources told The Post.
Private equity giant Thoma Bravo — a tech-focused firm which had earlier been in talks with Musk a couple of possible joint bid for Twitter — shouldn’t be readying a rival bid within the event that Musk’s $44 billion Twitter takeover is terminated, sources near the situation said.
As reported by The Post, Orlando Bravo’s firm in early April had expressed interest in buying Twitter, after which later partnering with Musk on his Twitter bid.
But that was several weeks ago, and the leveraged financing marketplace for mega buyouts has since seized up, insiders said. As such, it could be nearly not possible for Thoma Bravo — or some other private-equity firm, for that matter — to lift the junior financing needed to finish a leveraged buyout of Twitter, in line with one lending source.
A spokesperson for Thoma Bravo declined to comment.
Analysts have speculated that Elon Musk is either attempting to wiggle out of the deal altogether or cut the value.REUTERS
Twitter this week told its employees it shouldn’t be concerned with renegotiating Musk’s $54.20-a-share takeover agreement, who earlier this week stepped up questions on whether Twitter has properly disclosed the share of bot accounts on the social network, sources said.
Analysts have speculated that Musk is either attempting to wiggle out of the deal altogether or cut the value. As reported by The Post, earlier this week Musk’s SpaceX rocket company staged a young of stock in a bid to lift $1.25 billion. Insiders speculated that Musk may be trying to raise money for the Twitter buyout through the deal, which couldn’t immediately be confirmed.
Musk has been trying to lift financing to scale back his personal exposure to Twitter. Presently, he’s investing $19 billion within the buyout including the $4 billion of Twitter stock he bought shortly before reaching the merger agreement. His goal in April was to scale back his exposure to below $15 billion in total, sources said.
Twitter is saying publicly and to its employees it shouldn’t be concerned with renegotiating Musk’s $54.20-a-share takeover agreement.AP
That $19 billion of exposure doesn’t include the $6.25 billion that will probably be loaned against a few of his Tesla shares.
Meanwhile, Musk’s relentless questioning of Twitter’s policing of spam and bots — including posting a poop emoji in response to Twitter CEO Parag Agrawal’s defense of the corporate’s practices earlier this week — is making it difficult for him to seek out more financing in what’s already a difficult lending market, sources said.
“Debt will probably be rather a lot harder to sell now that he has questioned Twitter’s user base,” the second lender said. “He’s undermining their financials.”
Musk has been attempting to sell preferred shares in Twitter to Apollo Global Management and others to interchange a few of the junior debt he arranged to finance the deal, a second lender with direct knowledge of those talks said.
Musk posted a poop emoji in response to Twitter CEO Parag Agrawal’s defense of the corporate’s practices earlier this week.TWITTER/AFP via Getty Images
Morgan Stanley has committed to loaning Twitter $3 billion in junior financing to support a Musk buyout. Now it likely wouldn’t have the opportunity to resell that debt at any price, as banks typically do, the lender said.
In response, Morgan Stanley is prone to charge Twitter the very best rate of interest allowed in its Musk contract, which could amount to a crippling 12% and possibly more, the lender said.
The merger agreement expires in October after which may very well be prolonged one other six months. So if Musk refused to execute the merger agreement Twitter could sue him to implement the contract next spring.
Musk has also tweeted that he remains to be committed to the April 25 deal. While legal experts say he could be on shaky ground attempting to scrap it based on Twitter’s disclosures on bots and spam, it’s debatable whether company executives could be enthusiastic over protracted litigation to implement the terms of the deal.