Elon Musk, the world’s richest man and prospective Twitter owner, has secured a funding commitment of $46.5 billion to purchase the social media company in its entirety.
According to a filing with the Securities and Exchange Commission on Thursday, Musk plans to start a tender offer for Twitter’s shares.
As reported by Rebel News last week, Musk announced his offer to acquire 100% of Twitter for $54.20 per share – or a total of $41.39 billion. He did not explain how he would finance the acquisition of the platform at the time, leading many to speculate he may have not been entirely serious about the offer. Some Twitter employees who filled out a survey expressed their suspicion that Musk only made the offer as part of a “pump and dump” scheme.
Twitter responded to his buyout offer by launching a “poison pill” defense late last Thursday to potentially thwart the takeover.
Musk has made several hints that he would be exploring a tender offer to buy all of the social media platform’s common stock. In several tweets, Musk wrote “Love me tender,” and in another, he asked his audience of 82.7 million followers to fill in the blank to the phrase “_______ is the Night.”
Commentators suggested that he was referring to the R. Scott Fitzgerald book “Tender is the Night”.
Under a tender offer, Musk, who currently owns around 9.1% of the company’s common stock, would bypass Twitter’s board of directors and take the offer directly to other shareholders and buy out their shares.
While Musk hasn’t publicly stated whether he plans to pursue that option, Twitter's board of directors itself has not yet responded to the possibility of him doing so.
All we know for now is that the SEC filing states that, “entities related to (Musk) have received commitment letters committing to provide an aggregate of approximately $46.5 billion.”
The billionaire “is seeking to negotiate a definitive agreement for the acquisition of Twitter ... and is prepared to begin such negotiations immediately,” the documents say.
According to TechCrunch, the tranche of Musk’s buyout offer comes from three major buckets.
The first tranche, per the filing, comes from Morgan Stanley and “certain other financial institutions” that have “committed to provide $13 billion in financing” to Musk in the form of a $6.5 billion “senior secured term loan facility,” a $500 million “senior secured revolving facility,” a $3 billion “senior secured bridge loan facility,” and a $3 billion “senior unsecured bridge loan facility.”
The second bucket of cash comes from, once again, Morgan Stanley and others who have “committed to provide $12.5 billion in margin loans” to Musk, against what we presume are his shares in Tesla and other companies.
And, third, an “equity commitment letter” from Musk to “provide equity financing for the Proposed Transaction or the Potential Offer sufficient to pay all amounts payable in connection with the Offer and the Merger” net of the above funding sources. The total value of this equity commitment from Musk is “expected to be approximately $21 billion,” the filing states.
“To summarize: Musk intends to borrow around $13 billion in various fashions; borrow $12.5 billion against his own equity holdings; and pay around $21 billion from his own holdings. It’s a somewhat complicated collection of funding sources, but Musk’s bid is hardly small, so the path to collecting the needed cash in one pile is understandably convoluted,” the publication reported.