Elon Musk is in talks with major investment firms and high net worth individuals to obtain additional financing for its $44 billion acquisition. Twitter People familiar with the matter said, set up TWTR.N and collected little of its assets in the deal.
Musk is the richest person in the world, with Forbes estimating his net worth at around $245 billion. However, most of his wealth is tied to shares of Tesla Inc TSLA.O, the maker of electric cars he leads. Last week, Musk revealed that he sold $8.5 billion worth of Tesla stock after the deal to buy Twitter.
The new financing, which could be in the form of preferred equity or common stock, could reduce the $21 billion cash contribution Musk has committed to the deal as well as the margin loan he underwrites. backed by his Tesla stock, the sources said.
Last month, banks that agreed to provide $13 billion in loans based on Twitter’s business balked at providing more debt for Musk’s acquisition due to the company’s limited cash flow. based in San Francisco, Reuters reported last month.
Musk also pledged some of his Tesla shares to banks to arrange for a $12.5 billion margin loan to help finance the deal. He may look to cut the size of the margin loan based on new investor interest in financing the deal, one of the sources said.
Large investors such as private equity firms, hedge funds and high net worth individuals are in talks with Musk about providing preferred equity financing for the buyback, sources said. know. Preferred equity will pay a fixed dividend from Twitter, in the same way that a bond or a loan pays regular interest, but will increase in price relative to the equity value of the company.
The sources added, Apollo Global Management Inc APO.N and Ares Management Corp ARES.N are among a number of private equity firms that have negotiated a financing offer.
Sources say Musk is still deciding whether he will let his partners in writing write the equity checks needed for the deal. The sources added that, for now, Musk is not looking to take on more debt for the deal with Twitter.
Musk has also been in talks with some of Twitter’s major shareholders about the possibility of them moving their shares into the deal instead of cashing out, one of the sources said. Former Twitter CEO and current board member Jack Dorsey is checking to see if he’s up to his duties, a source added.
Large institutional investors, such as Fidelity, are also negotiating the transfer of their shares, according to the source.
Musk tweeted that he would try to keep as many investors on Twitter as possible as he made the company private.
The sources requested anonymity because the matter was confidential. Musk, Dorsey, Fidelity, Apollo and Ares did not immediately respond to requests for comment.
Investors are wondering whether Musk will complete the deal with Twitter he has stymied in the past. In April, he decided at the last minute not to take a seat on Twitter’s board. In 2018, Musk tweeted that there was “guaranteed financing” for a $72 billion deal to take Tesla private but failed to go ahead with an offer.
Twitter shares rose 1.2% to $49.63 in afternoon New York trading on Monday, close to a $54.20 buyback price per share, as investors interpreted the news of the news. New financial account is more certain for closing the deal.
Musk will have to pay Twitter a $1 billion termination fee if he walks away, and the social media company could also sue him to finalize the settlement.
Musk, who calls himself a libertarian, has criticized Twitter’s censorship policies. He wants Twitter’s algorithm to prioritize tweets that are public and opposes giving too much power over the service to ad corporations. Read full story
(Reporting by Chibuike Oguh in Los Angeles and Krystal Hu in New York, edited by Greg Roumeliotis and Lisa Shumaker)
