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Musk makes another U-turn in Twitter deal and will buy the company for $44 billion

Autor: Article based upon analysis from Reuters Breakingviews | Link: Musk’s Twitter capitulation will be painful
Timp de citit: 2 minute

On Tuesday afternoon, after a half-year of funny business, Elon Musk announced he is actually going to buy Twitter for $44 billion.

Tesla’s chief executive had been set for a court showdown after attempting to scrap the deal. But he appears to be finally listening to his lawyers.

Where’s a win for investors, there’s a slippery slope for Tesla’s owner, who was headed for trial on the case on October 17.

Now, the world’s richest man is prepared to push ahead with the transaction on the agreed terms following months of legal drama.

Before the deal is signed, it’s most probable that Twitter would want a judge to seal an airtight settlement.

Musk’s shenanigans started in April, when he said he wanted to buy the company, but soon after he changed his mind.

Investors committed huge sums of money alongside Musk, not having a clue that he would start accusing the company of hiding fake accounts.

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In July he said he would not buy Twitter, and judges would settle the case. But October Twitter is not the same as April Twitter.

The company has faced a tumultuous stock decline. Debt and equity markets aren’t the same either.

Nevertheless, Musk offered to buy the company for the same price he agreed to pay in April. That would leave quite a predicament for banks.

They are on the hook for $13 billion in financing. Morgan Stanley, leading the deal for Musk, already reported $282 million of losses tied to loans last quarter.

But Musk’s unpredictability may have meant some banks didn’t yet account for potential losses on their Twitter loans.

The company faces an unclear future since Musk’s allegations are hard to get over.

He has said the company effectively lied about its metrics and appeared to violate non-disclosure and non-disparagement obligations. To all this, operational challenges add, too.