Tesla boss to commit $33.5 billion of his own money, and Morgan Stanley to provide $13 billion in debt to finance potential deal
Elon Musk on Thursday said he has secured $46.5 billion in debt and equity financing to buy Twitter Inc (NYSE: TWTR) and is planning to take his offer directly to shareholders.
In an SEC filing, Musk said he would be committing $33.5 billion of his own money, including $21 billion of equity and $12.5 billion of margin loans from Morgan Stanley against some of his Tesla Inc (NASDAQ: TSLA) shares, to finance the transaction.
Multiple financial institutions, including Morgan Stanley, have also agreed to provide another $13 billion in debt secured against Twitter itself, the filing said.
It is unclear whether Musk, the CEO of Tesla, would sell his stocks in the electric carmaker to cover the $21 billion equity financing.
Although Musk currently holds 172.6 million shares in Tesla, he has qualified for compensation in the form of stock options, worth around $25 billion, after the EV maker reported record profit and revenue.
Twitter acknowledged proposal
Musk, the world’s richest person, on April 14, offered to buy Twitter for $54.20 a share in cash, or around $43 billion.
Although the micro-blogging platform has not responded to the offer yet, Musk, in the filling, mentioned that he is prepared to begin negotiations immediately.
The social media company acknowledged receipt of Musk’s proposal.
“We are in receipt of the updated, non-binding proposal from Elon Musk, which provides additional information regarding the original proposal and new information on potential financing,” a Twitter spokesperson said in a statement.
“As previously announced and communicated to Musk directly, the Board is committed to conducting a careful, comprehensive, and deliberate review to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders.”
Interest from other firms
Musk’s latest move comes after Twitter adopted a limited duration shareholder rights plan, which is often known as the ‘poison pill’ in an effort to protect itself from a potential hostile takeover, that would sell shares at a discount if any shareholder amasses a stake of more than 15%.
Tesla’s boss, who describes himself as a “free speech absolutist,” acquired a 9.1% stake in Twitter earlier this month and said that the social media company needs to be taken private to grow and become a platform for free speech.
Last weekend, Musk hinted at the hostile approach in a cryptic tweet quoting Elvis Presley’s 1956 hit “Love Me Tender.”
Although the Twitter bid is drawing interest from investors who have financed his previous ventures, including Tesla and SpaceX, most private equity firms are choosing to stay away from political controversies and fearing that they will not be able to control Musk, the New York Post reported earlier this week.
“Private equity firms don’t get paid for headline risk,” a source told the news outlet, referring to Musk’s taste for controversy.
Moreover, few private equity firms are willing to participate in a hostile bid aside from controversies.
Investment firm Apollo Global Management Inc (NYSE: APO), which is currently the largest shareholder of Twitter, is considering ways to finance the deal and is open to working with Musk or any other bidder, Reuters reported earlier.
Buyout firm Thoma Bravo LP has also expressed its interest in acquiring Twitter and said it is exploring the possibility of putting together a bid.
Picture Credit: Fox Business
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