American billionaire Elon Musk says he raised $46.5 billion to fund the purchase of Twitter, which pressured the company’s board of directors to negotiate a deal.
Last week, Musk announced an offer to buy the social media platform for $54.2 per share, or about $43 billion. at that time.
On Thursday, Tesla’s chief executive said in documents filed with the US Securities Commission that he is exploring a so-called tender offer to buy all of the social media platform’s common stock for $54.2 per share in cash. Under the tender offer, Musk, who owns about 9% of Twitter shares, would take his bid directly to shareholders, bypassing the board.
But Musk has not yet decided whether to do so.
Twitter said in a statement, Thursday, that it had received Musk’s updated offer. The company said its board of directors “is committed to conducting a careful, comprehensive, and considered review to determine the course of action it believes is in the best interest of the company and all of Twitter’s shareholders.”
Last week, Twitter’s board of directors adopted a “poison pill” defense clause that could make a takeover bid prohibitively expensive. If someone were to take a 15% stake in the company, it would pay out massive shareholders and potentially bankrupt the company.
Where does the funding come from?
According to a disclosure to the regulator, funding for Musk’s deal will come from Morgan Stanley and other financial institutions including Barclays, Bank of America, Societe Generale, Mizuho Bank, BNP Paribas and MUFG. Morgan Stanley is one of the largest contributors to Twitter, behind the Musk and Inguard Group.
Musk’s documents say $13 billion of the funding will come from Morgan Stanley and other banks, up to $12.5 billion will be loans secured through his Tesla stock, and a commitment of $21 billion in equity, “directly or indirectly.” » of him, although he did not.
Donna Hitschurch, a professor of finance at Columbia University, said Musk’s latest move showed a “tightening of the goal” by lining up prominent banks that could fund his bid.
Twitter shares rose slightly to $46.95 in Thursday trading. The stock price is $7.25, or 13% less than Musk’s bid.
The documents say that Musk “is seeking to negotiate a final agreement to acquire Twitter … and is ready to begin these negotiations immediately.”
By offering a tender, Musk will try to persuade shareholders to pledge their shares to him at a certain price on a certain date. If enough shareholders agree, Musk could use that as leverage to get the board to drop the “poison pill” plan.
Musk indicated that a tender could be launched several times this week in tweets using the word “tinder.” (agencies)