Twitter’s deal to sell itself for $44 billion to Elon Musk looks shaky – but the deal could be the struggling social network’s only selling option as buyout funding dries up amid soaring rates interest and falling stock prices of tech companies, sources told The Post.
Private equity giant Thoma Bravo — a tech-focused firm that had previously been in talks with Musk about a possible joint Twitter bid — isn’t preparing a competing bid in case the Twitter takeover of $44 billion by Musk would be over, sources familiar with the situation mentioned.
As The Post reports, in early April, Orlando Bravo’s company had expressed an interest in buying Twitter and then later partnering with Musk on its Twitter offering.
But that was several weeks ago, and the market for leveraged financing for mega-buyouts has since seized up, insiders said. As such, it would be nearly impossible for Thoma Bravo — or any other private equity firm, for that matter — to raise the junior funding needed to complete a leveraged buyout of Twitter, according to a loan source.
A spokesperson for Thoma Bravo declined to comment.
Twitter told its employees this week that it was not interested in renegotiating the $54.20 per share buyout deal from Musk, who earlier this week raised questions about whether Twitter had correctly disclosed the percentage of bot accounts on the social network, sources said.
Analysts have speculated that Musk is either trying to pull out of the deal altogether or cut the price. As The Post reported, earlier this week, Musk’s rocket company SpaceX staged a stock offering to raise $1.25 billion. Insiders speculated that Musk may seek to raise funds for the Twitter takeover through the deal, which could not immediately be confirmed.
Musk tried to raise funds to reduce his personal exposure to Twitter. Currently, he is investing $19 billion in the buyout, including the $4 billion in Twitter shares he bought shortly before closing the merger deal. Its goal in April was to reduce its exposure to less than $15 billion in total, sources said.
This $19 billion in exposure does not include the $6.25 billion that will be loaned out against some of its Tesla stock.
Meanwhile, Musk’s relentless questioning of Twitter’s spam and bot monitoring – including posting a poo emoji in response to Twitter CEO Parag Agrawal’s defense of the company’s practices earlier this week – making it difficult for him to find more funding in what is already a challenge. loan market, sources said.
“Debt will be a much harder sell now that he’s polled the Twitter user base,” the second lender said. “It undermines their finances.”
Musk tried to sell preferred shares of Twitter to Apollo Global Management and others to replace some of the junior debt he arranged to fund the deal, said a second lender with direct knowledge of the talks. .
Morgan Stanley has pledged to lend Twitter $3 billion in junior funding to support Musk’s takeover. Now he probably wouldn’t be able to resell that debt at any price, as banks typically do, the lender said.
In response, Morgan Stanley is likely to charge Twitter the highest interest rate allowed in its Musk contract, which could be 12% and possibly more, the lender said.
The merger agreement expires in October and could then be extended for another six months. So if Musk refuses to perform the merger agreement, Twitter could sue him to enforce the contract next spring.
Musk also tweeted that he was still committed to the April 25 deal. While legal experts say he would be on shaky ground trying to take it down based on Twitter’s disclosures of bots and spam, it’s debatable whether company executives would be keen on a prolonged litigation to enforce the terms of the agreement.