Back in August I posted a note under the heading “Twitter: A headache in the making for Musk?” Well, what a headache it has already been for him and he has not even started to deal with the servicing of the debt mountain of his intended Leverage Buy Out (LBO). Certainly, and I don’t mind repeating it, Twitter as it is today does not justify the $44bln price tag Musk has placed on it and the business cannot not sustain the planned $25bln debt burden.
So, I must admit I was surprised to read that he intended to proceed with the acquisition. I thought it would be cheaper, and a lot less bother, to pay the $1bln breakage fee.
Musk, however, does have a cunning plan to transform Twitter into a super app – something akin to WeChat of China which allows you to chat, shop, send money, book shows, restaurants etc – which Musk thinks would turn Twitter into a $30bln turnover company (currently $5bln) within 5 years. If he could pull that off, it certainly would change the picture completely.
Bankers, however, are a skeptical lot, not generally prone to sharing a client’s blue sky enthusiasm for a business. It is probably for this reason that it is rumoured that Musk is trying to include a “subject to financing” condition in his revised offer to Purchase. Twitter board is, however, having none of it, which seems that Musk’s Twitter headache is not over just yet