Musk has introduced new investors to his $ 7 billion Twitter deal

Musk has introduced new investors to his $ 7 billion Twitter deal

Elon Musk has brought in more than a dozen new investors to help fund Twitter’s $ 44 billion acquisition, including billionaire Larry Ellison and venture capital firm Sequoia Capital, according to securities documents submitted Thursday morning.

Investors together will contribute $ 7 billion to fund the acquisition of Twitter, with the rest coming from Mr. Musk’s pocket or through loans.

Mr Musk said he would partially finance the deal with a $ 12.5 billion loan from his shares in Tesla, the electric car company he runs. As a result of the new equity commitments, Mr. Musk said he would reduce the size of that loan to $ 6.25 billion for Tesla shares from $ 12.5 billion.

He also said he had secured $ 13 billion in other loans from seven banks and $ 21 billion in cash. Mr. Musk has not yet named the source of this money.

The 18 investors listed in Thursday’s complaint are a mix of big names like Fidelity and also the so-called. Family Offices – Firms that manage the wealth of billionaires and other wealthy individuals. Binance, a cryptocurrency exchange, contributes $ 500 million, while an affiliate with Oracle co-founder Mr. Ellison invests $ 1 billion. Sequoia finances $ 800 million, while Qatar Holding, the Sovereign Wealth Fund, finances $ 375 million.

According to two people who received information about the potential investment, Mr. Musk’s representatives have been researching a wide range of investors in recent days. Some traditional private investment firms had previously tried to invest in the transaction but were reluctant to invest under the terms offered.

The new funds have given investors more confidence that the deal will close, as few investors are betting on this probability, especially given what capital Mr. Musk personally has, along with its unpredictable nature. The deal will not close in three to six months, and Mr. Musk will have to pay $ 1 billion in taxes if his funding is to be disbursed.

“It was a smart financial and strategic move by Muskie that would be well received across the board,” said Daniel Ives, managing director and analyst at investment firm Wedbush.

Mr Ives said he expected Mr Musk to bring in additional equity partners to help reduce the approximately $ 20 billion in cash he had personally entered into the deal. Twitter shares rose more than 2 percent in pre-market trading.

Mr. Musk offered to buy Twitter on April 14 for $ 54.20 a share, after he had amassed enough shares in the company to become its largest shareholder. He resigned from the board seat and rejected the restrictions that would be imposed on him. At the time, Mr. Musk said he had lost confidence in Twitter’s management to do what he thought would help the platform achieve the “public imperative” of free speech.

The company board adopted the “poison pill”, which is a mechanism to slow down the arrest attempt and buy some time. Board members were concerned about the direction in which Mr. Musk would take the company and its financing options, as much of his wealth was tied to Tesla shares.

A few weeks before the offer, Mr. Musk offered Twitter to get rid of advertising, have an open source algorithm, and do more to emphasize freedom of speech principles, among other changes.

But on April 25, Mr. Musk signed a deal to buy Twitter for about $ 44 billion. Twitter’s board ran out of options, and Brett Taylor, chairman, told the company’s 7,000 employees that day that “the board unanimously decided that Elon’s offer was the best value for our shareholders.”

Anupreta sister And Melina Delkic Contributed to the report.

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