- Banks could lose a “nine figure” payday due to Elon Musk’s decision not to cancel the $44 billion Twitter deal.
- If the deal is completed, Musk’s financial advisors and Twitter’s financial advisers could be able to pocket $192 million.
- He must prove that the transaction had a material adverse impact on his business, which is a difficult task for the billionaire.
After Elon Musk, the billionaire, said that he was going to end his deal to buy Twitter because it disclosed “false” and misleading numbers regarding fake accounts, Musk’s dance of ‘will-he will-he-won’t-he took a new turn Friday.
Twitter has stated many times that about 5% of its users are spam accounts. Musk, through a letter he filed with Skadden to US Securities and Exchange Commission Friday, is certain that it’s higher than 5% and used this belief to end the $44 billion deal.
His decision could lead to a loss of many banks in what promises to be one the most lucrative paydays on Wall Street.
Morgan Stanley — Musk’s trusted financial advisor — could collect almost $192million in fees. This is the highest M&A earnings this year and the third-largest since 2020 according to Refinitiv data that was cited Financial Times.
Although the advisory fees will be paid by the banks, the majority of the fees are only payable if the deal is closed. According to Insider, bankers are eager to see Musk and Twitter get together.
To support Musk’s acquisition, Morgan Stanley, BofA and Barclays, MUFG. BNP Paribas. Mizuho. Societe Generale. This debt was to be taken from banks’ balance sheets and syndicated with third-party investors as high-yield bonds, or leveraged loans.
If the deal is formally canceled by either party, it could result in a collective “nine figure” payday for all banks involved. This was according to Insider.
A banker from another firm participated in the financing of the debt, and said that the process was not over for the acquisition. Musk could lose in a long-running legal process, he says.
The billionaire is facing a legal nightmare. Twitter is vowing that it will sue Musk to force a deal to close. To void the Twitter purchase, Musk must argue that there was a material adverse impact on the transaction. However, courts are not known to favor apprehensive buyers and courts seldom rule in favour of them.
Musk would have to pay $1 billion to Twitter as a termination fee for ending the deal. Twitter can force Musk to close the deal if the court finds other conditions are met — including financing.
“When you’re the wealthiest man in the world you can play around with anybody”
It took Morgan Stanley just six days to coordinate the syndicate banks in order to support Musk’s $44 Billion takeover of Twitter.
Insider learned that Musk signed a deal without considering Twitter’s financials and dismissed the company’s inability to generate cash flow. This move led to some lenders refusing to participate in the financing.