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I'm sure you already know this, but the deal has already been financed. He is not buying the whole Twitter by himself, just the majority. If co-investors bail

I'm sure you already know this, but the deal has already been financed. He is not buying the whole Twitter by himself, just the majority. If co-investors bail out, investment banks who signed the deal take those stocks. If you compare the purchase price to what Twitter likely would cost without the deal–using the price change of other social media platforms and internet ad platforms as a benchmark–it seems likely that Musk is paying ~$20 billion over the current market value. If Musk wants to offload even more stocks, he takes huge haircut. At least 50% or more. It's likely better to wait for better times and restructure Twitter. No matter how you look at it, this is horrible deal for Musk unless he can make Twitter shine again.

pclmulqdq 4y ago
I'm assuming that part of this settlement was that some of his funders told him that they wanted the embarrassment to end. This whole process has made him and all of his co-investor friends look like assholes and idiots, and I'm sure they didn't like that.
- Nokinside 4y ago
  Musk burned his reputation. His handshake or verbal agreement is worth much less going forward. Without trust he can't move fast. Someone like Warren Buffet can make a one phone call and the deal gets closed in few days because his word can be trusted.
- babypuncher 4y ago
  Well it's too late, I'm convinced all of them are assholes and idiots. Of course, I thought this even before the Twitter fiasco started. I just believe it even more strongly now.
  - pclmulqdq 4y ago
    A lot of people think that Elon Musk was the modern Nikola Tesla or (yes) Albert Einstein. These texts let them know that he is actually the modern PT Barnum.
    - Nokinside 4y ago
      Musk is modern day Howard Hughes. Brilliant man who worked in aviation and aerospace and did many things. Eccentric person with serious mental issues.
    - varelse 4y ago
    - foobiekr 4y ago
      He’s the modern day John Ernst Worrell Keely.
    - mensetmanusman 4y ago
      He is musk, there isn’t a great historical analogy because globalization has truly enabled him to rapidly impact the entire world with his antics and successes.
  - threatofrain 4y ago
    For me it was Elon Musk calling a rescue worker a pedophile and then doubling down on the claim. https://www.theguardian.com/technology/2018/jul/15/elon-musk-british-diver-thai-cave-rescue-pedo-twitter https://www.theguardian.com/technology/2018/jul/15/elon-musk...
    - mensetmanusman 4y ago
      I found it surprising to read that some of Elon’s high school classmates confirmed that slang word was used to mean ‘idiot’ in their locale. I have some family members from SA… very interesting culture to say the least!
      - mrguyorama 4y ago
        Back in middle school the "F" word for a bundle of sticks was often used as a derogatory term directed at people you didn't like, regardless of their sexual orientation. That doesn't make it okay for me to call someone that on the public stage because as an adult you are supposed to know better and keep up with changing public opinion Just because you did something stupid and wrong as a kid doesn't mean you should be able to get away with doing it as an adult.
- ActorNightly 4y ago
  Having a very brief look at the world of the ultra rich through an acquaintance of a friend, Im pretty sure that "reputation" to those people means a very different thing than it does to us. The key thing to remember is that these people live a very luxurious lifestyle that they can fund without ever having to work a day in their lives, so funding stuff like that to them is pretty much entertainment.
  - pclmulqdq 4y ago
    If you watch the expert testimony from the Depp v. Heard trial, you can see a little bit about how "reputation" is measured and how much it can matter to the rich and famous. It is a lot more like how companies measure "brand equity" than how normal people think about reputation.
    - ActorNightly 4y ago
      Depp would not be considered ultra rich. Depp has a net worth of 650 million at peak, which is tiny compared to Musk, Bezos, etc.
      - javajosh 4y ago
        (I had to look this up) Musk is worth ~$240B, ~1000x more than Depp. Honestly, I'm impressed that a (and I say this with love) junkie actor could do so well. https://www.investopedia.com/articles/investing/012715/5-richest-people-world.asp https://www.investopedia.com/articles/investing/012715/5-ric...
      - wyclif 4y ago
        Not only that, but Depp is notoriously irresponsible with his wealth. Before he had to liquidate some properties because of the trial, he had an excess of houses, condos, boats, cars, and all kinds of expensive to maintain personal holdings. I don't know for sure, but from what I've seen of Elon Musk, he is a lot more conservative with his wealth—even considering the Twitter deal.
        4y ago
- rodgerd 4y ago
  His co-investors are the Saudi royal family, Larry Ellison, and the Murdoch family. These do not strike me as a group of people overly concerned with the opinions of ordinary folks.
  - piva00 4y ago
    If you add Peter Thiel to the list you get most of the contemporary villains in just one place. What a great outlook for Twitter...
paxys 4y ago
No one knows the details of the agreements Musk signed with potential co-investors and banks, but considering it has been 6+ months since and the reputation, value and bank balance of the underlying asset – Twitter – has fallen (partially due to Musk's own antics), not to mention drastically different overall economic conditions, I wouldn't be surprised if they all have second thoughts as well.
- HillRat 4y ago
  Second thoughts, absolutely, but also hell-or-high-water contracts that require MAEs to break, and Musk has been notably unsuccessful in making that argument (hence where we are now!). Gonna be a lot of blood on the floor when folks have to take the writedown on this.
  - swores 4y ago
    Musk failed to prove a material adverse effect by Twitter. But if his investors wanted to get out of their contracts, they might have legal standing (IANAL), or at least enough threat of it to be allowed out of the contract by Musk to avoid more court battles, based on the fact that he has caused MAE... After all, there is an open court case of Twitter v Musk (separate to Musk v Twitter) in which Twitter claimed: "Since signing the merger agreement, Musk has repeatedly disparaged Twitter and the deal, creating business risk for Twitter and downward pressure on its share price." and "Musk’s strategy is also a model of bad faith. While pretending to exercise the narrow right he has under the merger agreement to information for “consummation of the transaction,” Musk has been working furiously—albeit fruitlessly—to try to show that the company he promised to buy and not disparage has made material misrepresentations about its business to regulators and investors. He has also asserted, falsely, that consummation of the merger depends on the results of his fishing expedition and his ability to secure debt financing." (Copied from the legal case Twitter filed - https://corpgov.law.harvard.edu/2022/07/14/twitter-vs-musk-the-complaint/ https://corpgov.law.harvard.edu/2022/07/14/twitter-vs-musk-t... )
    - shapefrog 4y ago
      Surely someone who committed a billion can just tell him they refuse because the platform has no users and is 99% bots Please if you are a bored billinaire that got suckered into this, take it all the way to trial. Then in the closing arguments "its just a prank bro"
Animats 4y ago
"pending receipt of the proceeds of the debt financing contemplated thereby" Not equity. And probably at worse rates than could have been obtained in April.
- Nokinside 4y ago
  $7.1 billion in equity from 19 independent investors. $20 billion cash from Musk, $6.25 billion in personal bank loans to Musk (he is hooking his Tesla stocks) Rest is senior secured bank loans and subordinated debt loaned against Twitter stock. The cost of the debt is about $1 billion per year if I remember correctly.
  - res0nat0r 4y ago
    https://twitter.com/oneunderscore__/status/1577346886360506368?s=20 https://twitter.com/oneunderscore__/status/15773468863605063... > In conclusion, Elon Musk's Twitter purchase will have to be heavily financed by someone else in order for him to complete it. > In May, according to an SEC filing, Musk's Twitter buy was most heavily subsidized by Saudi Prince Al Waleed bin Talal Al Saud Not a great sign for activists using Twitter speaking out against the Saudi government, just based on what has happened already in the past.
- HWR_14 4y ago
  Musk locked in the rates in April. The banks who offered that financing are going to take a 100MM+ hit off of the deal going through.
  - shapefrog 4y ago
    Locked in rates at 12%. If they cant shift it off to the market they will just stick it in the trading book.
    - HWR_14 4y ago
      I mean, if they cannot shift it to the markets, it's because the markets think its not worth what they paid for it. And it's a lot of risk and capital to tie up themselves. They may have to resell some of it at, say, 14% to get some of the risk off their books.
ChicagoDave 4y ago
I think this is a critical point. Making Twitter profitable cannot possibly include magnifying the alt-right minority of the U.S. Driving the moderate users and progressives away with TFG and moderation changes that allow QAnon misinformation would severely damage Twitter as a company. I also guarantee some group of savvy developers are building Twitter 2.0 and will release it if and when Musk starts destroying the company from within. Employees will quit. Users will abandon the site. And I still think Musk is clueless about the tech stack. It's mindbogglingly complex and he's not going to replace the hardcore tech staff with sycophants off the street. There's a necessary equilibrium required to keep Twitter going and growing the platform. I just don't think he's going to outright gut it and turn it into a mindless "free speech" platform. The shit-posts would humiliate him. Or he turns it into Maga Social and doesn't care about financial losses.

pclmulqdq 4y ago

I'm assuming that part of this settlement was that some of his funders told him that they wanted the embarrassment to end. This whole process has made him and all of his co-investor friends look like assholes and idiots, and I'm sure they didn't like that.

Nokinside 4y ago
Musk burned his reputation. His handshake or verbal agreement is worth much less going forward. Without trust he can't move fast. Someone like Warren Buffet can make a one phone call and the deal gets closed in few days because his word can be trusted.
babypuncher 4y ago
Well it's too late, I'm convinced all of them are assholes and idiots. Of course, I thought this even before the Twitter fiasco started. I just believe it even more strongly now.
- pclmulqdq 4y ago
  A lot of people think that Elon Musk was the modern Nikola Tesla or (yes) Albert Einstein. These texts let them know that he is actually the modern PT Barnum.
  - Nokinside 4y ago
    Musk is modern day Howard Hughes. Brilliant man who worked in aviation and aerospace and did many things. Eccentric person with serious mental issues.
  - varelse 4y ago
  - foobiekr 4y ago
    He’s the modern day John Ernst Worrell Keely.
  - mensetmanusman 4y ago
    He is musk, there isn’t a great historical analogy because globalization has truly enabled him to rapidly impact the entire world with his antics and successes.
- threatofrain 4y ago
  For me it was Elon Musk calling a rescue worker a pedophile and then doubling down on the claim. https://www.theguardian.com/technology/2018/jul/15/elon-musk-british-diver-thai-cave-rescue-pedo-twitter https://www.theguardian.com/technology/2018/jul/15/elon-musk...
  - mensetmanusman 4y ago
    I found it surprising to read that some of Elon’s high school classmates confirmed that slang word was used to mean ‘idiot’ in their locale. I have some family members from SA… very interesting culture to say the least!
    - mrguyorama 4y ago
      Back in middle school the "F" word for a bundle of sticks was often used as a derogatory term directed at people you didn't like, regardless of their sexual orientation. That doesn't make it okay for me to call someone that on the public stage because as an adult you are supposed to know better and keep up with changing public opinion Just because you did something stupid and wrong as a kid doesn't mean you should be able to get away with doing it as an adult.
ActorNightly 4y ago
Having a very brief look at the world of the ultra rich through an acquaintance of a friend, Im pretty sure that "reputation" to those people means a very different thing than it does to us. The key thing to remember is that these people live a very luxurious lifestyle that they can fund without ever having to work a day in their lives, so funding stuff like that to them is pretty much entertainment.
- pclmulqdq 4y ago
  If you watch the expert testimony from the Depp v. Heard trial, you can see a little bit about how "reputation" is measured and how much it can matter to the rich and famous. It is a lot more like how companies measure "brand equity" than how normal people think about reputation.
  - ActorNightly 4y ago
    Depp would not be considered ultra rich. Depp has a net worth of 650 million at peak, which is tiny compared to Musk, Bezos, etc.
    - javajosh 4y ago
      (I had to look this up) Musk is worth ~$240B, ~1000x more than Depp. Honestly, I'm impressed that a (and I say this with love) junkie actor could do so well. https://www.investopedia.com/articles/investing/012715/5-richest-people-world.asp https://www.investopedia.com/articles/investing/012715/5-ric...
    - wyclif 4y ago
      Not only that, but Depp is notoriously irresponsible with his wealth. Before he had to liquidate some properties because of the trial, he had an excess of houses, condos, boats, cars, and all kinds of expensive to maintain personal holdings. I don't know for sure, but from what I've seen of Elon Musk, he is a lot more conservative with his wealth—even considering the Twitter deal.
      - 4y ago
rodgerd 4y ago
His co-investors are the Saudi royal family, Larry Ellison, and the Murdoch family. These do not strike me as a group of people overly concerned with the opinions of ordinary folks.
- piva00 4y ago
  If you add Peter Thiel to the list you get most of the contemporary villains in just one place. What a great outlook for Twitter...

paxys 4y ago

No one knows the details of the agreements Musk signed with potential co-investors and banks, but considering it has been 6+ months since and the reputation, value and bank balance of the underlying asset – Twitter – has fallen (partially due to Musk's own antics), not to mention drastically different overall economic conditions, I wouldn't be surprised if they all have second thoughts as well.

HillRat 4y ago
Second thoughts, absolutely, but also hell-or-high-water contracts that require MAEs to break, and Musk has been notably unsuccessful in making that argument (hence where we are now!). Gonna be a lot of blood on the floor when folks have to take the writedown on this.
- swores 4y ago
  Musk failed to prove a material adverse effect by Twitter. But if his investors wanted to get out of their contracts, they might have legal standing (IANAL), or at least enough threat of it to be allowed out of the contract by Musk to avoid more court battles, based on the fact that he has caused MAE... After all, there is an open court case of Twitter v Musk (separate to Musk v Twitter) in which Twitter claimed: "Since signing the merger agreement, Musk has repeatedly disparaged Twitter and the deal, creating business risk for Twitter and downward pressure on its share price." and "Musk’s strategy is also a model of bad faith. While pretending to exercise the narrow right he has under the merger agreement to information for “consummation of the transaction,” Musk has been working furiously—albeit fruitlessly—to try to show that the company he promised to buy and not disparage has made material misrepresentations about its business to regulators and investors. He has also asserted, falsely, that consummation of the merger depends on the results of his fishing expedition and his ability to secure debt financing." (Copied from the legal case Twitter filed - https://corpgov.law.harvard.edu/2022/07/14/twitter-vs-musk-the-complaint/ https://corpgov.law.harvard.edu/2022/07/14/twitter-vs-musk-t... )
  - shapefrog 4y ago
    Surely someone who committed a billion can just tell him they refuse because the platform has no users and is 99% bots Please if you are a bored billinaire that got suckered into this, take it all the way to trial. Then in the closing arguments "its just a prank bro"

Animats 4y ago

"pending receipt of the proceeds of the debt financing contemplated thereby" Not equity. And probably at worse rates than could have been obtained in April.

Nokinside 4y ago
$7.1 billion in equity from 19 independent investors. $20 billion cash from Musk, $6.25 billion in personal bank loans to Musk (he is hooking his Tesla stocks) Rest is senior secured bank loans and subordinated debt loaned against Twitter stock. The cost of the debt is about $1 billion per year if I remember correctly.
- res0nat0r 4y ago
  https://twitter.com/oneunderscore__/status/1577346886360506368?s=20 https://twitter.com/oneunderscore__/status/15773468863605063... > In conclusion, Elon Musk's Twitter purchase will have to be heavily financed by someone else in order for him to complete it. > In May, according to an SEC filing, Musk's Twitter buy was most heavily subsidized by Saudi Prince Al Waleed bin Talal Al Saud Not a great sign for activists using Twitter speaking out against the Saudi government, just based on what has happened already in the past.
HWR_14 4y ago
Musk locked in the rates in April. The banks who offered that financing are going to take a 100MM+ hit off of the deal going through.
- shapefrog 4y ago
  Locked in rates at 12%. If they cant shift it off to the market they will just stick it in the trading book.
  - HWR_14 4y ago
    I mean, if they cannot shift it to the markets, it's because the markets think its not worth what they paid for it. And it's a lot of risk and capital to tie up themselves. They may have to resell some of it at, say, 14% to get some of the risk off their books.

ChicagoDave 4y ago

I think this is a critical point. Making Twitter profitable cannot possibly include magnifying the alt-right minority of the U.S. Driving the moderate users and progressives away with TFG and moderation changes that allow QAnon misinformation would severely damage Twitter as a company. I also guarantee some group of savvy developers are building Twitter 2.0 and will release it if and when Musk starts destroying the company from within. Employees will quit. Users will abandon the site. And I still think Musk is clueless about the tech stack. It's mindbogglingly complex and he's not going to replace the hardcore tech staff with sycophants off the street. There's a necessary equilibrium required to keep Twitter going and growing the platform. I just don't think he's going to outright gut it and turn it into a mindless "free speech" platform. The shit-posts would humiliate him. Or he turns it into Maga Social and doesn't care about financial losses.