Musk says he secured $46.5 billion in funding for Twitter bid

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April 21 (Reuters) – Elon Musk said on Thursday he had lined up $46.5 billion in debt and equity financing to buy Twitter Inc (TWTR.N) and was considering taking his offer directly to shareholders, according to a file filed with US regulators.

Musk himself has pledged to provide $33.5 billion, including $21 billion in equity and $12.5 billion in margin loans against some of his Tesla Inc (TSLA.O) shares to fund the transaction. He is chief executive of electric vehicle manufacturer Tesla.

Musk, the world’s richest person according to a Forbes tally, presented a “best and last” cash offer of $43 billion to Twitter’s board on April 14, saying the social media company should be private to grow and become a platform. for freedom of expression. Read more

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But Twitter did not respond to his offer and adopted a “poison pill” to thwart it. Musk is also considering a takeover bid to buy all of the company’s stock from shareholders, but has not decided whether to do so, according to Thursday’s filing. Read more

Musk, Twitter’s second largest shareholder with a 9.1% stake, said he could make big changes at the microblogging company, where he has more than 80 million users.

Shares of Twitter rose less than 1% on the funding announcement, indicating the market is still skeptical of the deal.

Tesla shares soared more than 3% and the value of Musk’s 172.6 million Tesla shares rose more than $5 billion on Thursday following a strong quarterly report. On Wednesday, he qualified for compensation in the form of stock options worth about $24 billion after Tesla hit its profit and revenue performance targets. Read more

It’s unclear whether Musk would sell shares of Tesla to cover the $21 billion equity financing. Musk “may sell, assign or transfer” unpledged Tesla stock at any time, according to a margin loan commitment letter.

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

A Twitter spokesperson acknowledged receipt of Musk’s proposal.

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

Ryan Jacob, chief investment officer at Jacob Asset Management, which owns Twitter stock, said Musk’s latest filing will cause Twitter’s board to react.

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

Josh White, an 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 find a white knight, which which is unlikely, or negotiate with Musk to get a higher value and remove the poison pill.”

Musk’s offer has attracted private equity interest by participating in a deal for Twitter, Reuters reported this week, citing people familiar with the matter.

Apollo Global Management Inc (APO.N) is considering ways to fund any deal and is open to working with Musk or any other bidder, while Thoma Bravo has informed Twitter that he is exploring the possibility of putting together a bid. Read more

The New York Post said Thursday that Thoma Bravo was in talks with Musk for a joint deal. Thoma Bravo did not respond to a request for comment.

Musk has made a number of announcements on the platform, some of which have landed him in hot water with US regulators.

In 2018, Musk tweeted that he had “secured funding” to take Tesla private for $420 a share – a move that resulted in millions of dollars in fines and forced him to resign as the automaker’s chairman. automobile to resolve claims from the United States. securities regulator that he defrauded investors.

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Reporting by Nivedita Balu, Uday Sampath and Chavi Meta in Bengaluru, Hyunjoo Jin, Noel Randewich and Peter Henderson in San Francisco and Sheila Dang in Dallas; Written by Anna Driver; Editing by Mark Porter, Rosalba O’Brien and Daniel Wallis

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