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How will Elon Musk pay for his proposed $44 billion acquisition of Twitter? Here’s What We Know – National


Elon Musk bought himself some time on Thursday, after a judge granted the billionaire’s request to stop a Twitter lawsuit to allow him to close his proposed $44 billion purchase social media company by October 28.

Now comes the big question: how will he pay for it?

Earlier this week, Musk said he would buy Twitter for $54.20 per share, a price agreed in April, but with a condition that closing the deal depends on debt financing. for the transaction to be executed.

What is his financial plan?

Musk has committed to providing $46.5 billion in equity and debt financing for the acquisition, including a $44 billion price tag and closing costs. Banks, including Morgan Stanley MS.N and Bank of America Corp BAC.N, pledged to provide $13 billion in debt financing to support the deal.

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Twitter on Thursday cited one of the banks as saying that Musk had not informed them that he intended to close the transaction. Musk said that the banks are “working collaboratively to finance the closure” on or around October 28.

Musk’s $33.5 billion ownership pledge will include 9.6 percent of his Twitter shares, valued at $4 billion, and $7.1 billion he has secured from equity investors, including Cointelegraph. Oracle Corp founders ORCL.N Larry Ellison and Saudi Prince Alwaleed bin Talal.

That leaves Musk needing to secure an additional $22.4 billion in funds to cover the equity financing portion of the deal.

How much cash does he have?

Musk, 51, is the richest person in the world with a net worth of $219 billion according to Forbes, but most of his fortune is tied to his stakes in Tesla and Space X.

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According to Reuters calculations, Musk has about $20 billion in cash after selling off part of his Tesla shares through multiple transactions in November and December of last year and April and August of this year. This means he will need to raise between $2 billion and $3 billion more, even as other equity and debt commitments are made.

How can he fill the equity shortfall?

He can choose to sell off his stake in Tesla or his stake in SpaceX. Other options include borrowing capital from banks to buy shares or attracting more investors to contribute equity capital.

In August, Musk said he has no plans to sell off his stake in Tesla anymore, but Musk’s latest turnaround has raised concerns about whether he will sell more of the carmaker’s stock. electricity to finance the deal or not.

According to Reuters calculations, Musk owns 465 million Tesla shares worth $111 billion after a 3-for-1 stock split. He has usurped a large portion of his Tesla shares.

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Does he have enough equity investors?

On April 20, Oracle founder Larry Ellison said he was interested in participating in the deal as one of the investors on Twitter.

Ellison is among investors who have promised $7.1 billion in financing for the deal. To date, no investor has publicly said that they will decline their commitments.

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