Hi, Aaron Weinman here, back from vacation. And Elon Musk was kind enough to wait until I returned to call off his $44 billion pursuit of Twitter.
Let's unpack how this impacts the Wall Street banks that expected a "nine-figure" payday from the deal.
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1. Musk's decision to terminate a $44 billion deal to buy Twitter could scupper one of Wall Street's best-ever paydays. The transaction would've been the third-biggest fee pool for a merger or acquisition since 2020, according to data from Refinitiv. It's a hammer blow in what's been a poor year for dealmaking across the capital markets.
Musk said he terminated the agreement to buy Twitter because of "false and misleading" numbers of fake user accounts. Musk has questioned Twitter's claims that it has about 5% of spam accounts on its platform, but it's going to be a tall order to prove this in court.
Bankers are hopeful a court will force Musk to close the deal, otherwise they could miss out on more than $190 million in fees.
That's not including the fees the underwriting banks — Morgan Stanley, BofA, Barclays, MUFG, BNP Paribas, Mizuho, and Société Générale — stand to pocket from selling about $13 billion in debt in the capital markets in the form of high-yield bonds or leveraged loans.
These banks needed just six days to iron out a deal for Musk and Twitter, and did it without Twitter's financials. Some even passed on participating in the financing because they were skeptical over Twitter's ability to make money.
But the allure of a billionaire, and the deluge of business he provides Wall Street was enough to convince these lenders to do a deal.
"When you're the richest man in the world, you can mess around with anyone and people will come back to you. I'm sure the banks will moan about it, but they'll probably be there for the next deal. That's the nature of the trade," one banker told Insider.
With Musk and Twitter destined for a fiery legal battle, bankers are hoping the deal crosses the finish line.
Read more for what this means for Wall Street here.
In other news:
2. The biggest losers in this market have one thing in common: arrogance. If last year was a bright, sunny day for markets, then 2022 is the dregs of winter.
3. From Jump Trading, to climbing Everest. Meet Chase Lochmiller, and get to know his unusual path to building a tech startup that's working with oil and gas companies like Exxon to solve age-old problems in the industry. Lochmiller's story is the latest in a series that highlights top quants who ditched Wall Street for startups.
4. Advisors that broke from Merrill Lynch and Morgan Stanley have turned to fintechs to service clients. As markets sour, here's the tools they'll look to drop and keep.
5. Germany's Moonfare just reached $100 million in US client assets, less than a year after expanding into the region. The fintech provides wealthy folks with access to private-equity funds, and Chief Executive Steffen Pauls told Insider that it's sitting "on a pile of cash." Here's how Moonfare plans to spend it.
6. Paxos is behind some of Wall Street's biggest crypto offerings from Bank of America to Mastercard. The startup, which lets other companies offer crypto services, is valued at $2.4 billion. This piece is the latest in a series dubbed the Rise of the Crypto Economy, which explores how digital assets are reshaping the economy.
7. A former investment manager at Celsius is suing the company and calling it a Ponzi scheme. Jason Stone, the chief executive of KeyFi, which was acquired by Celsius, filed the complaint in New York state court and accused the crypto platform of lacking basic security and risk management procedures.
8. Better pushed back on an exec who sued the company over allegations it violated securities laws. The mortgage startup denounced the suit as "baseless," but the exec said she was pushed out of the company for raising concerns about the conduct of Chief Executive Vishal Garg. Meanwhile, here's how Better went from the mortgage world's darling to laying off thousands.
9. Tom Ford hired Goldman Sachs to explore a potential sale, according to Bloomberg. A deal could value the luxury brand at several billion dollars.
10. Spirit Airlines has again put off voting on a winner between Frontier and JetBlue. The low-cost airline's shareholders were supposed to vote on Friday morning on whether it would accept the proposed acquisition by Frontier. The delay gives the company more time to mull over a rival bid from JetBlue. The shareholder vote has been rescheduled for July 15.
Done deal:
- Godspeed Capital Management has made an investment in Zyscovich, Inc. a architecture and interior design consulting firm. The company will join Godspeed's engineering and consulting growth platform.
Curated by Aaron Weinman in New York. Tips? Email [email protected] or tweet @aaronw11. Edited by Hallam Bullock (tweet @hallam_bullock) in London.