The CEO of Tesla and SpaceX, Elon Muskclaims to have raised $46.5 billion in funding to buy Twitter, putting pressure on the company’s board of directors to negotiate a deal.
Last week, Musk announced an offer to acquire the social media firm for $54.20 per share, equivalent to paying $43 billion. At the time he did not say how he would finance the acquisition.
In documents filed Thursday with US securities regulators, Musk said the financing would come from Morgan Stanley and other financial institutions. Some funds would be secured by shares that Musk owns in Tesla.
Twitter has yet to formally respond to Musk’s offer, but the company has adopted a defense strategy known as the “poison pill,” which could make a takeover attempt prohibitively expensive.
On Thursday, the company said in a statement that it had received Musk’s updated proposal and “new information about potential funding,” and said its board of directors is “committed to conducting a careful, thorough, and well-considered review.”
Musk, who owns about 9% of Twitter shares, said he is exploring what is known as a takeover bid in which Musk would try to get other shareholders to give him their shares at a certain price on a certain date. , bypassing the board of directors. If enough shareholders agree, Musk could use it as leverage to get the board to drop its “poison pill” defense against his $54.20 per share offer.
But Musk has not yet said if he will do that.
The poison pill would add considerably to the costs of an acquisition. If someone acquires a 15% stake in the company, it would trigger a huge shareholder payout that could bankrupt Twitter.
Other banks involved in the financing are Barclays, Bank of America, Societie Generale, Mizuho Bank, BNP Paribas and MUFG. Morgan Stanley is one of Twitter’s largest shareholders, behind the Vanguard Group and Musk.
In documents filed Thursday, Musk contends that $13 billion of financing would come from Morgan Stanley and other banks.
Up to $12.5 billion would be loans secured by Musk’s shares in Tesla, and he also pledged $21 billion in direct or indirect capital, though he did not disclose the source of those funds. The file says that the capital commitment could be reduced with contributions from others or with the acquisition of additional debt.
According to Forbes, Musk is the richest person in the world, with a fortune of nearly $279 billion. But much of his money is tied up in Tesla stock — according to FactSet, he owns about 17% of the company, which is valued at more than $1 trillion — and in SpaceX, his private space company. It’s unclear how much cash Musk has.
Tesla allows managers to use shares as collateral for loans, but limits the loan to 25% of the value of the pledged shares.
George is Digismak’s reported cum editor with 13 years of experience in Journalism