Elon Musk has provided $ 46.5 billion (£ 35.6 billion) in funding for a possible hostile Twitter offer and is investing $ 21 billion of his own money as part of the package.
In addition to that equity, Musk raised another $ 12.5 billion to bid through a margin loan secured against his shares in Tesla, the electric car maker he runs as chief executive. Morgan Stanley, the US investment bank, heads a group of financial institutions providing $ 13 billion in debt financing.
Funding commitments were outlined in a paper Thursday with the US Financial Supervisory Authority, the Securities and Exchange Commission. The document confirms that the richest man in the world is “researching whether to start a tender offer” for shares on Twitter that he does not own. Musk already owns 9.2% of the social media platform and announced a $ 54.20 offer per share last week.
The tender is seen as a hostile bid, as it bypasses the company’s board, which in a conventional takeover situation is expected to recommend a shareholder offer. Instead, the Twitter board moved to block Musk from increasing his stake without his approval.
Last week, Twitter launched a so-called defense with poison pills against Musk’s proposal, aimed at preventing him from making a stake in the business of more than 15%. The tactic commonly used by company boards to protect against unwanted approaches will allow existing Twitter investors to buy shares at a big discount if someone tries to buy more than 15% of the company without board support.
This would dilute the participation of an unwanted bidder such as Musk and is a significant obstacle to any bid not approved by the board. However, shareholders who support Musk’s approach could force the board to abandon the poison pill.
“This will put pressure on the board if a large number of shareholders offer their shares and may require the removal of the poison pill and the sale of Musk,” said Dan Ives, a senior analyst at Wedbush Securities.
Musk, who has more than 82 million followers on Twitter and is a prolific user of the platform, hinted over the weekend that he was considering a gentle approach.
Twitter has not yet officially responded to Musk’s $ 43 billion offer last week, other than announcing the course of the poison pills.
In a statement Thursday, the company said: “We are receiving an updated, non-binding proposal from Elon Musk, which provides additional information on the original proposal and new information on potential funding.
“As previously announced and communicated directly to Mr Musk, the board is committed to conducting a careful, comprehensive and informed review to determine the course of action it considers to be in the best interests of the company and all shareholders. on Twitter.
Musk, who describes himself as an “absolutist of free speech,” has indicated that he believes the microblogging site does not give users freedom. Revealing his approach to the takeover last week, he said in a letter to the board that Twitter is a “platform for free speech around the world” but could not achieve this “public imperative” in its current form and must be transformed as private company “.
Before launching his takeover bid, Musk noted a series of changes he could make to the company – some more likely than others – including introducing a tweet edit button and turning Twitter’s San Francisco headquarters into a homeless shelter. The latest proposal – later deleted by Musk – was tweeted by the world’s second richest man, Jeff Bezos.
Shares on Twitter rose 0.5% to $ 46.95 in response to Musk’s latest submission.
The money Musk personally set aside to fund a possible Twitter offer is less than the $ 23 billion bonus he now has to raise from Tesla after the electric car company posted record quarterly profits.
Musk, who already has a fortune of about $ 249 billion, is on the line to pay off bonus shares as Tesla reached major milestones in stock prices and financial growth in its earnings on Wednesday night.
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