_{DEAL OF THE MONTH}

Elon Does What Only Elon Can Do

In a move that only someone who names their social media platform after their son can pull-off, Elon sold X (formerly Twitter) to xAI (another Elon owned company) for $45 billion.  

X had faced challenges under Musk's leadership, grappling with substantial debt and a decline in daily active users (down ~10% to 200 million) amidst controversies surrounding his takeover and a significant exodus of advertisers.​

The deal is an all-stock transaction that values as X at $33 billion plus the assumption of $12 billion of debt, putting the implied valuation of xAI at $80 billion.

This merger is anticipated to create substantial synergies, particularly in training Grok, xAI's AI chatbot. Because every good AI should be trained based on what people put on X… It’s not like one fake news account caused a market rally or anything.

Now $80 billion for an AI company isn’t totally crazy, after all, take a look at OpenAI’s valuation over time.

This isn’t exactly a grand slam for Elon, valuation-wise. He bought Twitter for $44 billion back in late 2022, so this deal is being basically done at cost.

If I had to hazard a guess, I think Elon’s margin calls were getting to him and lenders were getting antsy, so he expanded the collateral package of the $12 billion of debt, but that is just speculation.

There are a number of mutual investors between the two companies, including Andreessen Horowitz, Sequoia Capital, Vy Capital and one of the Saudi sovereign wealth funds. These investors likely just took a stock swap, exchanging their X shares for xAI shares.

Overall, the acquisition of X and the subsequent transfer to xAI are some of the largest deals in tech history. Hopefully Elon doesn’t break his own arm patting himself on the back for adding another mega-deal to his resume.

Elon is known for crazy things, so all-in-all, this is really just more Elon shenanigans. I will leave you with a fun fact. If you really want to kick yourself, this deal implies a value for xAI that is greater than the market caps of GM, Ford, Boeing, 3M and Caterpillar… and all xAI has given us is memes?

_{NEWS ROUNDUP}

Top Reads

• Intel sells majority stake in Altera to Silver Lake investors in a deal valued at $8.75 billion

• Blackstone gears up for $11 billion European property buying spree

• Pantheon raises $5.2 billion for third senior credit secondaries program

• KKR nears deal to buy OSTTRA for $3 billion

• Lucid Motors buys Nikola’s Arizona assets

• IPOs put on hold by tariff uncertainty

• Rocket Companies acquires Mr. Cooper for $9.4 billion

• North American PE fundraising hits 7-year low in Q1’25

• ‘All bets are off’ for London IPOs as Trump tariffs whipsaw markets

• Norway acquires a 49% stake in two offshore wind farms €1.4 billion

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_{STRATEGIC DEAL OF THE MONTH}

Siemens Connects the AI Dots

Look, Elon may be doing $40+ billion internal transfers within his empire, but sometimes we have to take a step back and look at plain vanilla M&A deals.

Today’s plain vanilla M&A deal is Siemens’ all cash acquisition of Dotmatics for $5.1 billion, which will be financed largely by the sale of shares in publicly listed entities that Siemens holds.

Now, I may have come in a little hot with the commentary that this is a plain vanilla deal. While it’s an all cash deal struck at a price tag that won’t make anyone who has been in M&A for a while throw up, you also have to look at the multiple here.

This deal is being done at a whopping 39x FY’25E EBITDA, which Siemens claims is in-line with previous software deals. Sure, I would say the same thing if I wanted to convince my shareholders that I wasn’t overpaying for something. Don’t forget Dotmatics uses AI, so that’s an extra 5-10x right there, right?

Siemens anticipates up to ~$100 million of synergies per year in the medium-term (whatever that is), with beyond $500 million per year in the long-term (also undefined). This feels like when I tell my MD I’ll send him something shortly. Is that 5 minutes or 5 days? He doesn’t know and neither do I.

While Siemens doesn’t give us a fully baked timeline for the deal, they do state that once integrated, Siemens will become the first “AI-powered research to manufacturing digital thread.” Said differently, this is just vertical software integration for Siemens.

Now it’s time for my favorite segment of the article - what does this deal do to the share price! Unfortunately, there has been a lot of noise in the market recently, which makes parsing out this deal from Trump related shenanigans difficult, but I am going to try anyways.

Siemens announced the deal on April 2, 2025, and its share price basically went straight down after that. Now in Siemens’ defense, April 2nd was “Liberation Day” for everyone’s portfolios as Trump came out with the craziest tariff regime since Smoot-Hawley, so there is a bit of a case of bad timing from Siemens as well.

While it is difficult to tell what is noise from Trump or what is noise from the deal, it is clear that Siemens needs a bit of a share price pick up, so hopefully this deal can cover that for them…shortly.

_{INT’L DEAL OF THE MONTH}

It’s Prada Darling

Long time Buysiders readers probably think the only vertical I care about in the consumer space is food and bev, and you would be correct - I eat a lot of snacks; however, like any good finance bro, I keep an eye on all luxury brands so I know where to blow my entire bonus (though this year we may be looking at the Gap if the market continues its free fall).

Making it into the headlines this year are two of your (or your girlfriend’s) favorite Fifth Avenue shopping destinations - Prada and Versace. Despite global trade uncertainty, Prada is showing no fear and is acquiring Versace for €1.25 billion in cash. 

Prada is funding the deal using €1.5 billion of debt, composed of a €1.0 billion term loan and a €0.5 billion bridge loan. While that is substantial leverage, pro forma for the deal, Prada will still only be ~0.4x levered on a net debt basis.

Versace will account for ~13% of Prada’s revenue on a FY24 basis, which makes it the 3rd largest brand in the house behind Prada (of course) and Miu Miu.

Something anyone who owns anything Versace is familiar with is a hefty price tag, and that is no different than what current owners Capri Holdings learned six years ago, when it acquired Versace for $2 billion.

Unfortunately for Capri, this deal represents a significant haircut to their initial purchase price, but hopefully should allow them to focus on their other core brands - Michael Kors and Jimmy Choo.

Capri Holdings’ share price graph hasn’t done much moving aside from tariff-related news as it spiked on April 9th and held flat on April 10th and April 11th (the days of the announcement). It seems like this deal could be a positive for shareholders, but they are playing it safe given trade uncertainty.

This deal has the potential to be huge for Prada, given their strong track record with luxury brands. If they can learn from Capri’s missteps with Versace, there’s a real opportunity to turn the brand around. As Gianni Versace once said, “I am not interested in the past, except as the road to the future.” Let’s hope Prada takes that advice to heart.