Musk himself has committed to put up $33.5 billion which
will include $21 billion of equity and $12.5 billion of margin loans against some of his Tesla
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 $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 also is considering a tender offer
to buy all company stock from shareholders but has not decided whether to do
so, according to the filing on Thursday.
Musk, Twitter's second-largest shareholder with a 9.1
percent stake, has said he could make big changes at the micro-blogging
company, where he has a following of more than 80 million users.
Shares of Twitter rose less than 1 percent on news of the
funding, indicating that the market is still skeptical about the deal.
Shares of Tesla climbed more than 3 percent and the value of
Musk's 172.6 million Tesla shares rose by over $5 billion on Thursday following
a strong quarterly report. On Wednesday, he qualified for compensation in the
form of stock options now worth about $24 billion after Tesla hit profit and
revenue performance targets.
It is unclear whether Musk would sell shares in Tesla to
cover the $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 $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.
The New York Post said on 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,
including some that have landed him in hot water with US regulators.
In 2018, Musk tweeted that he had "funding
secured" to take Tesla private for $420 per share - a move that led to
millions of dollars in fines and him being forced to step down as chairman of
the car company to resolve claims from the US securities regulator that he
defrauded investors. © Reuters
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