Elon Musk Said to Seek More Financing for Twitter Deal

Elon Musk is in talks with giant funding corporations and excessive net-worth people about taking over extra financing for his $44 billion (roughly Rs. 3,37,000 crore) acquisition of Twitter and tying up much less of his wealth within the deal, folks conversant in the matter stated.

Musk is the world’s richest individual, with Forbes estimating his internet value at about $245 billion (roughly Rs. 18,77,208 crore). Yet most of his wealth is tied up within the shares of Tesla, the electrical automotive maker he leads. Last week, Musk disclosed he bought $8.5 billion (roughly Rs. 65,100 crore) value of Tesla inventory following his settlement to purchase Twitter.

The new financing, which might come within the type of most popular or frequent fairness, might scale back the $21 billion (roughly Rs. 1,60,900 crore) money contribution that Musk has dedicated to the deal in addition to a margin mortgage he secured in opposition to his Tesla shares, the sources stated.

The banks that agreed final month to offer $13 billion (roughly Rs. 99,600 crore) in loans primarily based on Twitter’s enterprise balked at providing extra debt for Musk’s acquisition given the San Francisco-based firm’s restricted money movement, Reuters reported final month.

Musk has additionally pledged a few of his Tesla shares to banks to rearrange a $12.5 billion (roughly Rs. 95,700 crore) margin mortgage to assist fund the deal. He could search to trim the scale of the margin mortgage primarily based on the brand new investor curiosity within the deal financing, one of many sources stated.

Major traders corresponding to non-public fairness corporations, hedge funds and excessive net-worth people are in talks with Musk about offering most popular fairness financing for the acquisition, the sources stated. Preferred fairness would pay a set dividend from Twitter, in the identical method {that a} bond or a mortgage pays common curiosity however would respect consistent with the fairness worth of the corporate.

Apollo Global Management Inc and Ares Management Corp are among the many non-public fairness corporations which have been in talks about offering the financing, the sources added.

Musk continues to be deciding whether or not he may have companions group up with him in writing the fairness test wanted for the deal, the sources stated. Musk just isn’t looking for to tackle extra debt for the Twitter deal presently, the sources added.

Musk has additionally been in talks with a few of Twitter’s main shareholders about the potential of them rolling their stake into the deal moderately than cashing out, one of many sources stated. Former Twitter Chief Executive and present board member Jack Dorsey is analyzing whether or not he’ll roll his take, one supply added.

Large institutional traders, corresponding to Fidelity, are additionally in talks about rolling over their stake, in response to the supply.

Musk has tweeted that he would attempt to hold as many traders in Twitter as attainable as he takes the corporate non-public.

The sources requested anonymity as a result of the matter is confidential. Musk, Dorsey, Fidelity, Apollo and Ares didn’t reply to requests for remark.

Tesla shares rally

Tesla shares ended buying and selling on Monday in New York up 3.7 p.c at $902.94 (roughly Rs. 69,300). Wedbush Securities managing director Dan Ives stated the information helped ease traders’ considerations that Musk was relying an excessive amount of on his Tesla shares for the Twitter deal financing.

“This is big if it materializes as we believe the Twitter deal has been a $100+ (roughly Rs. 7,700) per share overhang on Tesla’s stock due to the Musk financing concerns,” Ives tweeted.

Investors have been fretting over whether or not Musk will full the Twitter deal provided that he has backtracked previously. In April, he determined on the final minute to not take up a seat on Twitter’s board. In 2018, Musk tweeted that there was “funding secured” for a $72 billion (roughly Rs. 5,51,600 crore) deal to take Tesla non-public however didn’t transfer forward with a proposal.

Twitter shares ended buying and selling up 0.2 p.c at $49.14 (roughly Rs. 3,800) in New York on Monday, nearer to the $54.20 (roughly Rs. 4,200) per share acquisition worth, as traders interpreted the information on the brand new financing discussions as making it barely extra doubtless that the deal will shut.

Musk must pay a $1 billion (roughly Rs. 7,700 crore) termination price to Twitter if he walked away, and the social media firm might additionally sue him to finish the deal.

Musk, who calls himself a free speech absolutist, has criticized Twitter’s moderation insurance policies. He desires Twitter’s algorithm for prioritizing tweets to be public and objects to giving an excessive amount of energy on the service to companies that publicize.

© Thomson Reuters 2022