On 25 April 2022, Twitter’s board agreed to sell the company to Elon Musk for $54.20 a share — about $44 billion in cash. The price was not the product of a careful auction or a banker’s model. Musk had named it eleven days earlier in an unsolicited offer, and the figure itself was a joke: $54.20, a nod to the number 420. It was the most expensive punchline in corporate history.
What made the deal remarkable was not the headline number. It was the structure. Musk is rich, but not $44-billion-in-cash rich — not in a form he could simply wire over. To buy Twitter he had to assemble the money the way a private equity firm does: a stack of equity from himself and a syndicate of co-investors, sitting on top of $13 billion of debt borrowed against the very company he was buying. This is what a leveraged buyout looks like, and it was the largest one the technology industry had ever seen.
Then Musk tried to call it off. For three months in the summer of 2022 he argued the deal rested on bad data and moved to terminate it — a campaign that ended not in an exit but in a Delaware courtroom, a forced closing, and a company now carrying more than a billion dollars a year in interest it never used to owe. This is the breakdown.
01 Why a tweet became a contract
An offer nobody asked for
To understand the deal you have to understand how casually it began. In late January 2022, Musk started quietly buying Twitter stock. By early April he had built a stake of roughly 9% — large enough to make him the company’s single biggest shareholder, and large enough to require public disclosure. Twitter offered him a board seat. He accepted, then declined it. Days later, on 14 April, he offered to buy the entire company and take it private.
The bid was, in the language of M&A, hostile — not because it was aggressive in tone, but because it was made over the head of management with an implicit threat: accept, or I take the offer directly to your shareholders. Musk framed the purchase as a free-speech project rather than an investment, telling a TED audience he wanted Twitter to be a “platform for free speech” and insisting the deal was not about money.
Twitter’s board reacted defensively at first, adopting a poison pill — a measure that lets other shareholders buy discounted stock to dilute a hostile buyer who crosses an ownership threshold. But a poison pill does not stop a deal; it forces a negotiation. Once Musk disclosed committed financing, the board’s calculus changed. The offer was a 38% premium to where the stock had traded before his stake became public, it was all cash, and a board’s duty is to weigh value and certainty. On 25 April, it agreed.
The price took eleven days to set. The financing took months to assemble — and that gap is the whole story.
02 How you finance a $44 billion buyout
Other people’s money — and the company’s own balance sheet
A $44 billion purchase price is not, in fact, the amount of money Musk had to raise. The true figure was closer to $46.5 billion — the equity value of Twitter plus the cost of refinancing the company’s existing debt and paying the fees a deal of this size generates. That money came from two very different places, and the difference between them is the entire concept.
The first is equity — money that buys ownership and absorbs losses first if things go wrong. Musk’s original plan leaned partly on a margin loan secured against his Tesla shares, but that piece was fragile: if Tesla’s stock fell, the loan could be called. In May he dropped it and raised the equity commitment to $33.5 billion. Part came from Musk himself, including the roughly $4 billion Twitter stake he already held and billions raised by selling Tesla stock. The rest came from co-investors who wanted in.
The second is debt — $13 billion of it, lent by a syndicate of seven banks led by Morgan Stanley. The crucial detail, the one thing that makes this a leveraged buyout rather than a simple purchase, is who borrows the money. The debt was not Musk’s personal loan. It was lent to Twitter itself — secured against Twitter’s assets, to be repaid out of Twitter’s future cash flow. Musk was, in effect, having the company he was buying take out a loan to fund its own sale.
That structure is the engine of every leveraged buyout. It magnifies returns — the buyer commits less of their own money and keeps the upside above the debt — but it also magnifies risk, because the company must now service borrowing it never chose to take on. And the $13 billion was not cheap money. It was split across three pieces, each priced differently, each with its own role.
Twitter had been a marginally profitable company that paid almost nothing in interest. The new debt changed that overnight — a fact that would matter enormously once the business came under strain. But first, Musk tried to make the whole thing disappear.
03 The summer he tried to leave
Why a signed deal is so hard to escape
By July 2022, the mood had changed. Technology valuations had fallen sharply, comparable companies were worth far less than they had been in April, and the deal Musk had signed now looked expensive. He moved to terminate it, arguing that Twitter had misrepresented how many of its accounts were fake or automated — the so-called “spam bots” — and that this amounted to a breach serious enough to let him walk.
Twitter’s response was to sue him in the Delaware Court of Chancery, the specialised business court where most large American corporate disputes are decided. Twitter did not ask the court for the $1 billion breakup fee. It asked for something far more powerful: specific performance — a court order compelling Musk to actually complete the purchase at $54.20.
Here is the single most misunderstood feature of the deal. Many observers assumed the $1 billion reverse termination fee was an exit ticket — that Musk could simply pay it and walk. It was not. A modern merger agreement is deliberately engineered to be very hard for a buyer to escape. The fee covers only a narrow set of failures, such as financing falling through. It does not let a buyer leave because they have changed their mind, or because the market has moved against them. That market risk, by design, sits with the buyer. Walking away was never a $1 billion option; it was a courtroom fight Musk was likely to lose.
The bot argument was always going to be a hard sell. To win, Musk needed to prove not just that Twitter’s account estimates were imperfect, but that they were wrong in a way that constituted a material adverse effect — a legal bar so high that buyers almost never clear it. With a trial set for October and the evidence running against him, the calculation became simple.
In early October, two weeks before trial, Musk reversed course and agreed to close on the original terms. On 27 October 2022 the deal completed. He fired Twitter’s chief executive, chief financial officer and top lawyers within hours, and later renamed the company X.
04 The cost of winning an argument you lost
Twitter’s annual interest bill went from roughly $50 million before the deal to over $1 billion after it — on a company that generated about $1.2 billion of total revenue in 2024. The leverage did not just finance the purchase. It became the company’s defining financial fact.
A leveraged buyout is supposed to work like this: the buyer loads the company with debt, uses its cash flow to pay that debt down, improves the business, and eventually sells it or takes it public again at a profit. The whole model depends on stable or growing cash flow.
Twitter’s went the other way. Advertisers — the source of almost all the company’s revenue — pulled back sharply after the takeover, unsettled by abrupt changes to content moderation and by Musk’s own public conduct. Revenue fell at exactly the moment the interest bill rose. The banks, meanwhile, were trapped. When a bank lends for a buyout it expects to sell that debt onward to other investors within months, collecting a fee. Twitter’s financials were too weak for that, so the $13 billion sat on the banks’ own balance sheets for more than two years — what the industry calls a “hung” deal, and reportedly the worst such outcome since the 2008 financial crisis. The banks only managed to offload the debt in early 2025, once sentiment had finally shifted.
The final twist closed the circle. In March 2025, Musk merged X into his artificial-intelligence company, xAI, in an all-stock deal that valued the social platform at $33 billion in equity — $45 billion including debt. Both companies were his; the price was effectively one he chose. It let X’s investors trade a damaged asset for shares in a fashionable one, and it let the headline number land just shy of the $44 billion he had paid — a tidy way to suggest no value had been lost. Whether that is true depends entirely on which number you choose to believe.
- 01 A breakup fee is not an exit. Modern merger agreements deliberately assign market risk to the buyer. The $1B reverse fee covered narrow failures, such as financing collapsing — not a change of heart. Walking away was never for sale.
- 02 In a leveraged buyout, the target borrows. The $13B was Twitter’s debt, secured on Twitter’s assets — not a personal loan to Musk. The company effectively funded its own purchase, then inherited the interest bill.
- 03 Leverage cuts both ways. The structure works when cash flow is stable or growing. When advertisers fled and revenue fell, the same leverage that magnifies returns magnified the strain instead.
- 04 Related-party deals let you choose the number. The 2025 xAI merger valued X at a figure Musk effectively set himself, on both sides of the table. The headline price and the real price are not always the same thing.
Sources & further reading
Twitter, Inc. — SEC filings on the merger agreement, April 2022 ($54.20 per share, ~$44B, all-cash).
Musk financing disclosures — revised commitment letters, May 2022 (equity raised to $33.5B; Tesla margin loan dropped).
Delaware Court of Chancery — Twitter, Inc. v. Musk, complaint seeking specific performance, July 2022.
The Wall Street Journal — reporting on the $13B “hung” acquisition debt held by the bank syndicate, 2024.
Bank syndication reporting — sale of the X acquisition debt to investors, early 2025.
Public statements and filings on the xAI–X all-stock merger, March 2025.
This article is an educational breakdown for TheSpreadline and is not investment advice. Figures reflect publicly reported terms at the time of the deal.