Two years after Elon Musk’s $44 billion acquisition of Twitter, now rebranded as X, the deal is being labeled as the worst in Musk’s business empire, according to a recent report by CNBC. Despite initial plans for major financial institutions to profit from their involvement, seven of the world’s largest banks are still burdened by billions in unsold debt linked to the takeover.
The acquisition, originally seen as an opportunity to deepen relationships with one of the world’s wealthiest individuals, has instead turned into a significant financial liability. Banks expected to quickly sell off the debt to investors willing to take on more risk or who believed in Musk’s ability to improve Twitter’s performance. However, with the platform struggling to retain advertisers, the banks have found themselves unable to unload the loans.
The unsold debt has severely impacted the banks’ profitability, increased their financial risk, and limited their ability to engage in other deals. Moreover, Musk’s ability to raise capital for other ventures has also been hindered.
In contrast, some investment funds that provided financing in exchange for ownership or equity have not faced the same challenges. Unlike banks, these funds are not required to mark down their investments quarterly, giving them more flexibility.
In a related development, Shein, a popular fashion e-commerce site, has filed a lawsuit against rival Temu, accusing it of theft of trade secrets and fraud as both companies vie for dominance in the U.S. market. The legal battle between these Chinese-owned platforms, which have both gained significant traction among American consumers by selling discounted goods, raises questions about the competitive strategies and business models of each.
As Shein prepares for a potential IPO in London, the lawsuit could bring additional scrutiny to its operations, especially as it attempts to present itself as a legitimate player in the global market.
New data shows Musk’s Twitter takeover is worst deal for banks since 2008 financial crisis
Meanwhile, according to The Wall Street Journal report, Elon Musk’s $44 billion acquisition of Twitter, now rebranded as X, has become the worst buyout since the global financial crisis for seven major banks that financed the deal. The banks are struggling with $13 billion in unsold debt due to the declining value of the social media platform, leading to significant paper losses and reduced capital for other ventures. Despite ongoing interest payments, the banks are unlikely to recover the full value of the loan, which has lingered on their balance sheets for 20 months, the longest since the 2008 crisis.
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