November 29, 2022

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Elon Musk secures $46.5 billion to fund a potentially hostile Twitter bid | Twitter

Elon Musk has secured $46.5bn (£35.6bn) in funding to fund a potential enemy try to twitter He puts $21 billion of his own money as part of the package.

On top of those shares, Musk is raising an additional $12.5 billion for the show via a secured margin loan against his shares in Tesla, the electric car maker he runs as CEO. Morgan Stanley, the US investment bank, leads a group of financial institutions that provide $13 billion in debt financing.

Funding commitments are identified in A Deposit on Thursday With the US Financial Supervisory Authority, the Securities and Exchange Commission. The document confirmed that the world’s richest man was “exploring whether to initiate a tender offer” for Twitter shares he does not own. Musk already owns 9.2% of the social media platform and last week announced a bid of $54.20 per share.

The tender offer is viewed as a hostile offer because it bypasses the company’s board of directors, which in a traditional takeover situation would be expected to recommend an offer to shareholders. Instead, Twitter’s board of directors moved to prevent Musk from increasing his stake without his consent.

Twitter last week launched the so-called Defending toxic pills Against Musk’s bid, which was intended to prevent him from building a stake in the company greater than 15%. This tactic, commonly used by company boards as a bulwark against unwanted tactics, would allow existing Twitter investors to buy shares at a steep discount if anyone tried to buy more than 15% of the company without board support.

This would dilute the ownership of an unwelcome bidder like Musk and represent a large block for any unapproved bid from the board of directors. However, shareholders who support Musk’s approach could force the board of directors to abandon the toxic pill maneuver.

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“This will put pressure on the board if shareholders bid for their shares and could force them to remove the toxic pill and sell it to Musk,” said Dan Ives, chief analyst at Wedbush Securities in the US.

Musk, who has more than 82 million followers on Twitter and is a prolific user of the platform, hinted at the weekend that he was considering a tender approach.

Twitter has yet to officially respond to Musk’s $43 billion offer made last week, apart from announcing the toxic pill move.

In a statement on Thursday, the company said: “We are receiving the updated, non-binding offer from Elon Muskwhich provides additional information regarding the original offer and new information on potential financing.

“As previously announced and reported directly to Mr. Musk, the Board of Directors is committed to conducting a careful, thorough, and considered review to determine the course of action that it believes is in the best interest of the company and all of Twitter’s shareholders.”

Musk, who describes himself as a “free speech supporter,” made it clear that he believes the microblogging site doesn’t unleash on users. Revealing his takeover approach last week, he said in a letter to the board of directors that Twitter was a “platform for freedom of expression worldwide” but could not fulfill this “community necessity” in its current form and “needed to transform into a private company”.

Before launching the takeover bid, Musk had flagged a series of changes he might bring to the company — some likely more than others — including the introduction of an edit button for tweets and the transformation of Twitter’s San Francisco headquarters into a homeless shelter. Last suggestion – later deleted by Musk – Supported in a tweet by the second richest man in the world, Jeff Bezos.

Twitter shares rose 0.5% to $46.95 in response to Musk’s latest filing.

The money that Musk personally set aside to fund Twitter’s potential bid is less than the $23 billion reward he is now set to raise from Tesla after the electric car company reported record quarterly earnings.

Musk, who already has an estimated fortune of $249 billion, is in line with the bonus share payments because Tesla has achieved share price and financial growth milestones in Wednesday night earnings.