Elon Musk secures $46.5bn in funding for Twitter deal

Tesla founder has personally committed to provide $33.5bn for the deal, which will include $21bn of equity and $12.5bn of margin loans, a filing shows

Tesla chief executive Elon Musk has offered to buy 100 per cent of Twitter. Reuters
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Billionaire Elon Musk said on Thursday that he had secured a funding commitment of $46.5 billion to finance his bid to buy Twitter and is also considering to initiate a tender offer for its shares, a new filing to the US Securities and Exchange Commission showed on Thursday.

The chief executive and co-founder of the world’s biggest electric vehicle company, Tesla, has personally committed to provide $33.5bn for the deal. This will include $21bn of equity and another $12.5bn coming from margin loans, according to a new filing to the US Securities and Exchange Commission.

Banks, including Morgan Stanley and “certain other financial institutions”, have committed to offer another $13bn in debt secured against Twitter itself, as per the filing.

Twitter did not immediately respond to The National’s request for comments.

Mr Musk, the second-largest shareholder of Twitter, offered to buy 100 per cent of Twitter for about $43bn, proposing an offer price of $54.20 a share, in a securities filing with the US regulators last week.

The billionaire’s offer comes after his recent complaints about excessive censorship of content and lack of free speech on the microblogging site.

“Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy. What should be done,” Mr Musk said on Twitter last month.

In response to his poll, 70.4 per cent of users said Twitter does not stick to free speech principles, while 29.6 per cent supported the social media platform.

Twitter has yet to respond to Mr Musk’s proposal.

“Given the lack of response by Twitter, the reporting person [Elon Musk] is exploring whether to commence a tender offer to acquire all of the outstanding shares of common stock that are issued and outstanding at a price of $54.20 per share,” the company said in its latest SEC filing.

Mr Musk’s proposal has met some resistance, particularly from Twitter’s existing shareholders.

Saudi Arabian billionaire Prince Alwaleed bin Talal, who owns a stake in Twitter through his Kingdom Holding Company, rejected Mr Musk’s offer last week, saying it did not “come close to the intrinsic value of Twitter given its growth prospects”.

Last Friday, Twitter made a move to shield itself from a takeover bid by Mr Musk. The company’s board adopted a limited-duration shareholder rights plan, which would enable its shareholders to buy additional stock.

Under the plan, also known as a “poison pill” strategy to resist a bid from a potential acquirer, “the rights will become exercisable if an entity, person or group acquires beneficial ownership of 15 per cent or more of Twitter’s outstanding common stock in a transaction not approved by the board”, Twitter said in a statement.

The plan, which will expire in a year, “does not prevent the board from engaging with parties or accepting an acquisition proposal if the board believes that it is in the best interests of Twitter and its shareholders”.

Last week, buyout firm Thoma Bravo reportedly contacted Twitter to express an interest in putting together an acquisition offer that would rival Mr Musk’s bid.

Thoma Bravo, a private equity firm that had more than $103bn in assets under management as of the end of December, informed Twitter that it was exploring the possibility of putting together a bid, Reuters reported, citing sources.

 
Updated: April 22, 2022, 7:13 PM
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