Elon Musk says he has provided $46.5 billion in debt and equity financing to buy Twitter and is considering making his offer directly to shareholders, a filing with US regulators showed.
Musk himself has committed to raising $33.5 billion, including $21 billion in equity and $12.5 billion in margin loans against some of his Tesla stock, to fund the transaction.
As the world’s richest person, Mr Musk made a “best and final” cash offer of $43 billion to Twitter’s board of directors on April 14, according to Forbes tally, saying the social media company must be privatized to grow and become a platform for free speech.
Despite his wealth, there had been questions about how Mr Musk would fund a purchase.
In response, Twitter has launched a “poison pill” to thwart Mr Musk’s offer, although it has not formally declined his offer.
Mr Musk is Twitter’s second largest shareholder with a 9.1 percent stake and has said he could make big changes at the microblogging company, where he has a following of more than 80 million users.
Twitter shares fell less than 1 percent on news of the funding, suggesting the market is still skeptical of the deal.
By contrast, shares of Tesla are up almost 7 percent and the value of Musk’s 172.6 million shares rose over $10 billion after a strong earnings report. On Wednesday, he qualified for compensation in stock options now worth about $25 billion after Tesla posted profits
and sales performance goals.
It’s unclear if Mr. Musk would sell his Tesla shares to cover the $21 billion equity financing.
According to a Margin Loan Commitment Letter, Mr. Musk may “sell, dispose of or transfer” unpledged Tesla stock at any time.
Banks, including Morgan Stanley, have agreed to provide an additional $13 billion in debt secured against Twitter itself, the filing said.
A Twitter spokesman confirmed receipt of Musk’s proposal.
“As previously announced and communicated directly to Mr. Musk, the Board of Directors is committed to conducting a careful, comprehensive and deliberate review to determine what course of action it believes is in the best interests of the company and all Twitter shareholders,” Twitter said in a statement.
Ryan Jacob, chief investment officer at Jacob Asset Management, which holds Twitter shares, said Mr Musk’s recent filing would prompt Twitter’s board of directors to react.
“You had to consider the seriousness of the offer, and this filing can do that,” he said. “They’re going to have a hard time ignoring that.”
Josh White, an assistant professor of finance at Vanderbilt University and a former Securities and Exchange Commission financial economist, said the funding would likely “put pressure on Twitter’s board to either find a white knight, which is unlikely, or to deal with Mr. Musk.” negotiate Reach a higher value and remove the poison pill”.
Mr Musk’s bid has sparked interest from private equity in bidding for Twitter or participating in a deal.
https://www.independent.ie/business/world/musk-says-he-has-the-funds-in-place-to-get-twitter-deal-over-the-line-41575807.html Musk says he has the means to get the Twitter deal through the line