Elon Musk says he’s secured $46.5 billion in financing for his Twitter bid, an important disclosure seemingly meant to ease concerns about his commitment to the idea.
A new SEC filing indicates that more than $20 Billion would be made from various loans to Morgan Stanley. Equity financing will bring in another $21 billion.
Musk has not yet made a formal tender offer for Twitter, but it may come soon now that Musk has given more details about how he’d finance a deal. Musk is the owner of a wealth exceeding $260 billion. However, most of his fortune is locked up in Tesla stock as well as other immovable assets. He’ll need to borrow money as well as possibly sell Tesla shares to make the deal work.
Musk stated that he has not received any communication from the board of Twitter since his proposal for $54.20 a shares a week ago. Musk is now advising Morgan Stanley, while Twitter retains Goldman Sachs as well as JPMorgan.
Musk was left out of the SEC’s filling. Apollo and Thoma Bravo were among the Wall Street firms that had expressed interest in financing the Twitter transaction. It seems like they’ve lost interest and won’t be joining Musk in his bid for Twitter.
Twitter tried to keep away from Musk as much as possible. Last Friday, its board adopted a poison pill, a corporate mechanism that’ll let it sell deeply discounted stock to shareholders and reduce Musk’s stake. Twitter does not have the same protection against hostile takeovers that other tech companies. It doesn’t have the same type of dual-share classes as Meta, Alphabet and Snap, which firmly keep places control of those companies with their founders and CEOs.
But it’s been unclear how serious Musk was about his Twitter bid, the consequence of a his famous joke offer to privitize Tesla in 2018. The initial lack of details about how he’d finance the acquisition added to the confusion. Unsolicited takeover proposals are often made with great care, since investors may not be familiar with the numbers and might be reluctant to invest. Over the last week, insiders at other companies and employees of Twitter tried to ignore Musk. They hoped that the entire situation would end as soon as possible. At a Friday all-hands meeting, Parag Agrawal, CEO of the company, urged patience.
Musk sent two cryptic tweets in recent days about tender offers as part of an unusual style of corporate warfare. One referenced the Elvis Presley song “Love Me Tender,” the other, the F. Scott Fitzgerlad novel The Night is Tender. Combined, they receive more than a half-million Likes, a sign of Musk’s immense following on Twitter (82 million) as well as his ability to win over public support for his idea.