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Apollo and Sixth Street decided to opt out of financing Twitter deal when Musk backtracked on the acquisition back in July.
Apollo Global Management Inc and Sixth Street Partners are reportedly backing out of financing Elon Musk’s Twitter (NYSE: TWTR) deal. According to two sources familiar with the matter, both companies are no longer in talks with Musk regarding his proposed Twitter buyout. Their decision to back out reportedly happened several months ago, around the time that Musk backtracked from the deal.
Musk has affirmed that neither Apollo nor Sixth Street was still part of the third-party equity financing to acquire Twitter. Meanwhile, representatives for both Apollo and Sixth Street declined to comment. However, both companies have large credit investing arms, and could reemerge as investors. This is especially so if banks decide to syndicate Twitter buyout debt to investors.
Apollo, Sixth Street Were Once Ready to Back Musk’s Twitter Deal
Apollo and Sixth Street had been in discussions to contribute billions of dollars, via a preferred equity stake, to the Twitter acquisition. At the time, Musk was seeking to raise up to $6 billion from preferred equity investors. This was in order to lessen his own cash outlay burden from the $44 billion Twitter deal. However, what followed thereafter was a series of back and forth between Musk and Twitter over the latter’s handling of bot accounts.
According to the Tesla (NASDAQ: TSLA) CEO, the social media giant was not forthcoming in providing adequate information which addressed those fake account concerns. In addition, he also accused Twitter of attempting to misinform his team by providing manipulated data. However, the popular microblogging platform continues to deny Musk’s claims and maintain that they were as cooperative as possible.
Eventually, Musk pulled out of the deal, triggering a lawsuit from Twitter to force a continuation. The company accused him of developing cold feet and attempting to find an escape route with the bot accusations. Musk then countered Twitter’s lawsuit with one of his own. Both parties were set for a legal showdown less than two weeks from now until Musk announced the deal was back on. Financing details also include $13 billion of debt, which a group of Morgan Stanley-led banks agreed to provide.
Musk changing course to buy Twitter once more comes amid a significant downturn in the broader financial landscape. With inflation at record highs and interest rates rising , many conclude that financing optics remain bleak. This also becomes even more apparent when factoring in soaring global energy prices, which also impact the financial tapestry.
Interest Rate Hikes Doing Good for Crypto Stocks
However, the recent spate of interest rate hikes by global central banks is not all doom and gloom. For instance, about two weeks ago, crypto-linked stocks rallied as the US Federal Reserve announced another interest rate hike. Prior to this development, these crypto-associated stocks were at substantial lows owing to the general underperformance of the crypto market.