National Post

Musk says he has secured US$46.5 billion in funding for Twitter

- Nivedita Balu

Elon Musk on Thursday said he has lined up US$46.5 billion in debt and equity financing to buy Twitter Inc and is considerin­g taking his offer directly to shareholde­rs, a filing with U.S. regulators showed.

Musk himself has committed to put up US$33.5 billion, which will include US$21 billion of equity and US$12.5 billion of margin loans against some of his Tesla Inc shares to finance the transactio­n. He is chief executive officer of electric vehicle maker Tesla.

Musk, the world’s richest person according to a tally by Forbes, on April 14 presented a “best and final” cash offer of US$43 billion to Twitter’s board of directors, saying the social media company needs to be taken private to grow and become a platform for free speech.

But Twitter failed to respond to his offer and adopted a “poison pill” to thwart him.

Musk, Twitter’s second-largest shareholde­r with a 9.1 per cent stake, has said that he could make big changes at the micro-blogging company, where he has a following of more than 80 million users.

Shares of Twitter were up about 1 per cent on news of the funding, suggesting that the market is still skeptical about the deal.

Shares of Tesla climbed nearly 7 per cent and the value of Musk’s 172.6 million Tesla shares rose by over US$10 billion on Thursday following a strong quarterly report. On Wednesday, he qualified for compensati­on in the form of stock options now worth about US$25 billion after Tesla hit profit and revenue performanc­e targets.

It is unclear whether Musk would sell his stocks in Tesla to cover the US$21 billion equity financing.

Musk “may sell, dispose of or transfer” unpledged Tesla stocks at any time, according to a margin loan commitment letter.

Banks, including Morgan Stanley, have agreed to provide another US$13 billion in debt secured against Twitter itself, according to the filing.

A spokespers­on for Twitter acknowledg­ed receipt of Musk’s proposal.

“As previously announced and communicat­ed to Mr. Musk directly, the board is committed to conducting a careful, comprehens­ive and deliberate review to determine the course of action that it believes is in the best interest of the company and all Twitter stockholde­rs,” the Twitter representa­tive said in a statement.

Ryan Jacob, chief investment officer at Jacob Asset Management, which holds Twitter shares, said Musk’s latest filing would push Twitter’s board to respond.

“They had to consider the seriousnes­s of the offer, and this filing may do that,” he said. “It’s going to be hard for them to ignore it.”

Josh White, assistant professor of finance at Vanderbilt University and a former financial economist for the Securities and Exchange Commission, said the funding would likely “put pressure on Twitter’s board to either find a White Knight, which is unlikely, or negotiate with Musk to obtain a higher value and remove the poison pill.”

The offer from Musk has drawn private equity interest in participat­ing in a deal for Twitter, Reuters reported this week, citing people familiar with the matter.

Apollo Global Management Inc is considerin­g ways it can provide financing to any deal and is open to working with Musk or any other bidder, while Thoma Bravo has informed Twitter that it is exploring the possibilit­y of putting together a bid.

 ?? RYAN LASH / TED CONFERENCE­S, LLC / AFP VIA GETTY IMAGES FILES ?? Tesla chief Elon Musk’s announceme­nt that he has US$46.5 billion in financing to buy Twitter is likely to
force a response from the company, experts say.
RYAN LASH / TED CONFERENCE­S, LLC / AFP VIA GETTY IMAGES FILES Tesla chief Elon Musk’s announceme­nt that he has US$46.5 billion in financing to buy Twitter is likely to force a response from the company, experts say.

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