Elon Musk details .5 billion financing plan to buy Twitter

Elon Musk details $46.5 billion financing plan to buy Twitter

Elon Musk has revealed how he plans to fund his takeover of Twitter.

On Thursday, he filed a securities filing that outlines three sources of funding he secured to spend $46.5 billion on the social media platform:

  • Morgan Stanley Senior Funding provides $13.5 billion in loans.

  • Another $12.5 billion is coming from Morgan Stanley and other anonymous financial institutions through margin loans that will use Musk’s investments as collateral.

  • Meanwhile, about $21 billion will come from equity financing, which involves raising capital through the sale of shares. So Musk will cover that part himself.

The filing indicates whether Musk really has the money to buy Twitter. Musk’s current net worth has been valued at more than $260 billion, largely from his stake in Tesla. However, he has already pledged some Tesla stock for other loans, according to The New York Times. So, to free up additional funds, Musk managed to secure $26 billion from investment firms while using his shares as collateral.

Twitter’s board has yet to reject Musk’s takeover bid. But last week, board members voted unanimously to adopt a “poison pill” plan, designed to prevent a hostile takeover through stock purchases.

Musk’s Thursday security brief offers some clues as to what he might do in response. The document notes that it plans to launch a tender offer to buy shares of other Twitter investors at $54.20 per share. He also points out that Musk may choose to engage in discussions with Twitter board members about his takeover bid or other “strategic alternatives.”

However, Musk must be careful not to trigger Twitter’s poison pill scheme. Musk currently owns a 9.1% stake in the company. But if it ends up with a stake of 15% or more, Twitter can allow existing shareholders to effectively buy additional shares at a discount. Therefore, the poison pill could easily dilute Musk’s takeover bid.

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To circumvent this problem, Musk could try to convince Twitter’s board of directors of the merits of his takeover offer, or he could launch a “proxy contest”, which would involve soliciting the company’s shareholders to they vote against the current Twitter board.

If Musk is successful in acquiring Twitter, he plans to prioritize free speech and limit some content moderation on the social media platform. “I think we want to be, just very reluctant to take things down. Just very careful with permanent bans. You know, timeouts would be better than some permanent bans,” he told a TED talk. last week.

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