Billionaire Tesla CEO Elon Musk has secured the required financing to buy Twitter and take the company private, according to a new regulatory filing. Musk is also exploring a tender offer to buy shares directly from stockholders.
The document shows that Musk has received $46.5 billion in commitment to help finance the proposed deal. If he decides to go ahead with a tender offer, he will approach Twitter shareholders and offer to buy their shares within a specific time frame. He’s still considering whether to launch a tender offer for Twitter, according to the filing.
Musk, the richest man in the world, has secured $25.5 billion in debt financing from Morgan Stanley and other financial institutions, including Bank of America, Barclays, and Mizuho. He has also committed to provide $21 billion in equity financing, according to the document.
Musk is seeking to negotiate a “definitive agreement” with the board for the acquisition of Twitter.
“Twitter hasn’t responded to the proposal,” Musk says, according to the filing. “Given the lack of response by Twitter,” he’s “exploring whether to commence a tender offer to acquire all of the outstanding shares” at a price of $54.20 per share.
The billionaire, however, “has not determined whether to do so at this time.”
Some had speculated earlier that Musk lacked sufficient cash for the acquisition. The latest funding information, however, could make it harder for the board to claim he’s not a serious bidder.
Musk made a bid on April 14 to take the social media company private for $54.20 per share, which valued the company at around $43 billion. The firm’s board of directors the next day unanimously adopted a “poison pill” defense to prevent a hostile takeover.
The poison pill, also known as a shareholder rights plan, is used as a defense strategy to make Musk’s takeover more expensive and difficult.
If Musk reaches 15 percent ownership, the poison pill will be triggered. That would allow other stockholders to purchase additional shares at a discounted price, thus diluting Musk’s ownership stake.
On April 4, Musk announced that he had purchased 73.5 million Twitter shares, or 9.2 percent of the firm. Musk later reduced his holdings to 73.1 million shares, or 9.1 percent of the company, according to a securities filing. Twitter’s other large shareholders include The Vanguard Group (10.3 percent), Morgan Stanley (8.4 percent), and BlackRock (6.5 percent).