Musk secures $7bn for Twitter takeover
Elon Musk has secured about $7.1 billion of new financing commitments, including from billionaire Larry Ellison, a Saudi Prince, and Sequoia Capital, to help fund his proposed $44 billion takeover of Twitter Inc.
The equity commitments from 19 investors come as the Tesla Inc billionaire marshals capital to bankroll one of the biggest tech industry takeovers.
Musk had originally said he planned to fund the deal in part with a $12.5 billion loan against his shares in Tesla, the electric-vehicle company he runs.
The new funding will allow him to reduce by half the size of that margin loan to $6.25 billion, making the deal less risky for both Musk and his lenders. It also slightly reduces the amount of cash Musk needs to put up personally.
CNBC reported that Musk is expected to serve as temporary chief executive officer of Twitter for a “few months,” after he completes the deal.
Saudi Prince Alwaleed bin Talal, chairman of the board at Kingdom Holding Company, made the biggest contribution, agreeing to commit almost 35 million shares in Twitter — worth $1.9 billion — to retain a stake in the company following Musk’s takeover, according to an amended securities filing on Thursday morning.
Ellison, the co-founder of Oracle Corp who has a big stake in Tesla and a seat on its board, committed $1 billion through his trust.
Other investors named in the filing on Thursday include the world’s largest crypto exchange, Binance Holdings Ltd, Brookfield Asset Management, Fidelity Management & Research, and Qatar Holding.
Changpeng Zhao, CEO of Binance, which promised $500 million, tweeted that it was “a small contribution to the cause.”
With the financing picture becoming clearer, the market seems to be coming around to the idea that the deal will close.
The deal is set to close later this year and the two sides have each agreed to pay a $1 billion break-up fee if it falls apart.
“In this game of high stakes poker, Ellison and the impressive list of backers will remove more of an overhang from Tesla shares as the Musk leverage of shares now becomes less onerous,” said Dan Ives, analyst at Wedbush. “This was a smart financial and strategic move by Musk that will be well received across the board.”
Musk’s latest backers includes a bevy of traditional asset managers, venture capital firms, boutique hedge funds, and one of the world’s largest pools of capital. Qatar Holding, a unit of the nation’s wealth fund, has agreed to commit $375 million.
Saudi Prince Alwaleed previously rejected Musk’s bid, stating that it failed to come “close to the intrinsic value of Twitter.”
Musk is also in discussions with Twitter co-founder Jack Dorsey on contributing some of his shares toward the acquisition.