Elon Musk says he has commitments for $US46.5 billion in financing for Twitter deal
The billionaire Tesla founder has answered critics by saying he has the financing for the takeover of Twitter that includes $US21bn of his own money.
Elon Musk said he has lined up $US46.5 billion to fund his bid for Twitter, answering the biggest question that had loomed over his takeover offer.
In a regulatory filing, Mr Musk also said he was considering taking his offer straight to Twitter shareholders, bypassing a board that appears dug in. Twitter said Thursday it was reviewing the newly detailed proposal.
The financing commitments – about half in bank debt and half in cash promised by Mr Musk himself – lend credibility to what had, until now, looked more like a personal lark than a bona fide takeover play. When he lobbed in his bid last week, Mr Musk didn’t say how he planned to pay for the deal, which is expensive even for the world’s richest man.
Now he says he has lined up more than $US25bn in debt from a group of banks led by Morgan Stanley, Bank of America and Barclays. He would personally commit $US21bn in equity, the deal-making equivalent of a down payment on a home.
While Mr Musk surprised doubters by actually coming up with the money – in contrast to his infamous “funding secured” tweet in 2018 that hinted at an ultimately non-existent bid for Tesla – he is risking a considerable part of his fortune doing so.
Under the plan disclosed Thursday, he will hock $US62.5bn of Tesla stock, one-third of his stake in the world’s most-valuable car company, as collateral for bank loans. He’ll need to come up with $US21bn more in cash, which would likely mean selling Tesla stock or whittling his stakes in his privately held ventures, SpaceX and Boring Co.
And it leaves little margin for error at Twitter, which would be saddled with a heavy debt load under a new owner who has said he doesn’t care whether the company makes money.
People familiar with the matter said Mr Musk is still considering bringing in potential equity partners and has had conversations with some, which would lighten his own financial burden. He is also in line to receive billions of dollars in Tesla stock options after the company reported record quarterly earnings this week.
Twitter shares were little changed Thursday, closing at $US47.08 They have been trading well below Mr Musk’s offer of $US54.20 a share, a sign that investors are sceptical.
Twitter is still likely to reject his bid, which he described as “best and final,” in the coming days, people familiar with the matter said.
Mr Musk said Thursday he is considering launching a so-called tender offer, a direct offer to shareholders that sidesteps the board. In a series of not-so-cryptic tweets – “_____ Is the Night” and “Love Me Tender _____” – he has hinted as much in recent days.
That effort would be complicated by a defensive move that Twitter’s board made last week. It adopted a so-called poison pill, a legal manoeuvre that prevents Mr Musk from amassing more than 15 per cent of the company by offering every other investor cheap shares that would dilute his stake.
Mr Musk is a Twitter power user, with over 82 million followers and a long history of espousing his views on everything from space travel to cryptocurrencies. In January, he began buying Twitter stock, becoming the single-largest individual investor with a more than 9 per cent stake by April.
Since then he has been using his Twitter account to criticise the company, especially its approach to content moderation, which he believes impedes free speech.
Still unknown is whether other suitors might emerge for Twitter. The Wall Street Journal reported last week that private-equity firms including Apollo Global Management and Thoma Bravo are kicking the tires, and corporate suitors including Walt Disney and Salesforce have made bids in the past.
But the fact that nearly every global blue-chip investment bank is participating in Mr Musk’s bid – except for the two, Goldman Sachs and JPMorgan, advising Twitter in its response --\ suggests there isn’t a rival bidder waiting to surface.
The Wall Street Journal
More Coverage
Musk-led group makes $155bn bid for control of OpenAI
A consortium of investors led by Elon Musk has offered to buy the nonprofit that controls OpenAI, upping the stakes in his battle with Sam Altman over the company behind ChatGPT.
We’ll need a bigger axe, says Musk
The White House’s DOGE has drawn scrutiny for the rapid work of its technology team burrowing into multiple agencies, but it also says it has identified and cut more than $US1bn in spending.