Elon Musk says he raised $46.5 billion to buy Twitter
Elon Musk has announced that he has raised $46.5 billion, including $21 billion from his own fortune, to buy the social network Twitter. It plans to launch a tender offer for the outstanding securities of the blue bird.
In addition to that equity, Elon Musk is raising an additional $12.5 billion for the offering via a margin loan secured by his shares in Tesla, the electric car maker he leads as CEO.
Morgan Stanley, the US investment bank, leads a group of financial institutions providing it with $13 billion in debt financing.
The financing commitments were described in a filing Thursday with the US financial watchdog, the Securities and Exchange Commission.
The document confirmed that the richest man in the world “explored the opportunity to launch a public tender offer” for shares of Twitter that he does not own. Musk already owns 9.2% of the social media platform.
Last week, Twitter issued a “poison pill” against Musk’s bid, aimed at preventing him from taking more than a 15% stake in the company.
The tactic, commonly used by boards of directors as a bulwark against unwanted approaches, will allow existing Twitter investors to buy shares at a deep discount if someone tries to buy more than 15% of the company without Board support.
This would dilute the participation of an undesirable bidder such as Musk and pose a significant barrier to any bids not approved by the board. However, shareholders who support Musk’s approach could force the board to abandon the poison pill bet.
“It will put pressure on the board if a wave of shareholders bid their shares and could force a poison pill withdrawal and a sale to Mus.k,” said Dan Ives, principal analyst at U.S. financial firm Wedbush Securities.
Musk, who has more than 82 million Twitter followers and is a prolific user of the platform, hinted over the weekend that he was considering a soft approach.
Twitter has yet to formally respond to Musk’s $43 billion offer filed last week, other than announcing the poison pill move.
“We have received Elon Musk’s updated, non-binding proposal, which provides additional information regarding the original proposal and new information on potential funding”Twitter said in a statement, before adding:
“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 the course of action that it believes to be in the best interests of the Company and all Twitter shareholders”.
Musk, a “free speech absolutist” self-proclaimed, made it clear that he believed the microblogging site was not giving free rein to users.
Revealing his takeover approach last week, he said in a letter to the board that Twitter was “the platform for freedom of expression in the world” but could not reach this “societal imperative” in its present form and “must be transformed into a private space”.
Before launching his takeover bid, Musk had flagged a series of changes he could make to the company, including the introduction of an edit button for tweets and the transformation of Twitter’s headquarters to San Francisco into a homeless shelter.
This last suggestion, later deleted by Musk, was backed up in a tweet by the world’s second richest man, Jeff Bezos. Shares on Twitter rose 0.5% to $46.95 in response to Musk’s latest filing.
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