Investors are fretting over financing for the $44bn buyout against the backdrop of growing economic uncertainty.
Twitter Inc’s shares retreated further from Elon Musk’s offer price on Thursday as investors fretted over financing for the proposed $44bn buyout of the social media firm.
Apollo Global Management Inc and Sixth Street Partners, which had been looking to provide financing for the deal, are no longer in talks with the billionaire entrepreneur, two sources familiar with the matter told Reuters.
Shares of the microblogging site were down marginally at $51.12 after rising 20 percent since Musk proposed this week to go ahead with his April bid of $54.20 per share to take Twitter private.
“There’s still some uncertainty based on whether or not Elon can find the actual financing to do the deal,” said Randy Frederick, managing director of trading and derivatives for the Schwab Center.
Major banks that committed to fund $12.5bn, or about 28 percent of the deal, could be facing hefty losses as the swift pace of interest rate hikes has ratcheted up market volatility and dampened appetite for leveraged financing.
Speculation has risen over whether Musk will sell more of his Tesla Inc stock to fund the deal. He’s already raised $15.4bn this year by selling shares in the electric-vehicle maker.
“Financing will eventually end up going through one way or another,” said Robert Gilliland, managing director at Concenture Wealth Management. “It is just a point of negotiating terms at this stage.”
Musk committed to buying Twitter in April, but soon soured on the deal. The social media company then went to court seeking an order for Musk to go through with the deal.
Musk and Twitter agreed to postpone the billionaire’s deposition scheduled for Thursday as they try to reach an agreement to end their litigation, a source told Reuters.
Tesla shares fell 2 percent.