Elon Musk's $13B Twitter buyout is worst deal for banks since financial crisis

Elon Musk's $44 billion acquisition of Twitter, now rebranded as X, has been identified as the worst merger-finance deal for banks since the 2008-2009 financial crisis. A consortium of seven banks, including Bank of America and Morgan Stanley, provided $13 billion in loans to facilitate Musk's takeover in October 2022. Typically, banks sell such loans quickly to mitigate risk and generate fees; however, the financial performance of Twitter deteriorated shortly after the acquisition, leaving the banks unable to offload the debt without incurring significant losses. This situation has resulted in the loans being classified as "hung," meaning they remain unsold on the banks' balance sheets for an extended period. According to a report from the Wall Street Journal, these loans have been hung longer than any similar unsold deals recorded since the financial crisis. A finance professor noted that this is potentially the largest hung deal by dollar amount in history. Despite the challenges, X has been making interest payments on the loans, which carry high rates due to their below-investment-grade status. The banks may still recover their investments if X can meet its interest obligations and repay the principal when the loans mature, typically within seven to eight years.

- Elon Musk's Twitter acquisition is the worst bank deal since the 2008 financial crisis.

- A group of seven banks lent $13 billion to Musk for the acquisition.

- The loans have become "hung," remaining unsold on banks' balance sheets.

- X has been making interest payments, but the loans carry high rates.

- Recovery of investments depends on X's ability to repay the principal at maturity.