Elon Musk said in a statement with US regulators on Thursday that he has secured $46.5 billion in debt and equity financing to buy Twitter Inc (TWTR.N) and is considering pushing his bid directly to shareholders.
Musk has pledged $33.5 billion to finance the purchase, including $21 billion in equity and $12.5 billion in margin loans against some of his Tesla Inc (TSLA.O) shares. He is the CEO of Tesla, an electric vehicle manufacturer.
Musk, the world’s richest man, according to Forbes, made a “best and last” cash offer of $43 billion to Twitter‘s board of directors on April 14, claiming that the social media firm needed to be taken private in order to expand and become a platform for free speech.
However, Twitter ignored his offer and used a “poison pill” to frustrate him. According to the filing on Thursday, Musk is also exploring a tender offer to buy all of the company’s equity from shareholders, but has yet to decide.
Musk, Twitter’s second-largest stakeholder with a 9.1 percent stake, has hinted that the microblogging company, where he has a following of more than 80 million people, could undergo significant changes.
On hearing of the funding, Twitter’s stock gained less than 1%, indicating that the market is still suspicious about the transaction.
Following a solid quarterly report, Tesla shares jumped more than 3% and the value of Musk’s 172.6 million Tesla shares increased by more than $5 billion on Thursday. After Tesla met profit and revenue projections on Wednesday, he qualified for compensation in the form of stock options, which are now worth roughly $24 billion.
Musk hasn’t said whether he’ll sell Tesla stock to pay the $21 billion equity transaction. According to a margin loan commitment letter, Musk “may sell, dispose of, or transfer” unpledged Tesla stocks at any moment.
According to the petition, banks, including Morgan Stanley, have agreed to contribute another $13 billion in loans secured against Twitter.
“As previously announced and directly communicated to Mr. Musk, the board is committed to conducting a careful, comprehensive, and deliberate review to determine the course of action that it believes is in the best interest of the company and all Twitter stockholders,” according to a statement from a Twitter representative.
Musk’s latest filing, according to Ryan Jacob, chief investment officer of Jacob Asset Management, which owns Twitter stock, will force Twitter‘s board to reply.
“They have to think about the severity of the offer,” he said, adding that the filing might help. “It’ll be difficult for them to ignore it.”
The funding would likely “put pressure on Twitter’s board to either find a White Knight, which is unlikely, or negotiate with Musk to obtain a higher value and remove the poison pill,” according to Josh White, an assistant professor of finance at Vanderbilt University and a former financial economist for the Securities and Exchange Commission.
According to media reports this week quoting people familiar with the situation, Musk’s offer has piqued private equity interest in engaging in a deal for Twitter.
Apollo Global Management Inc (APO.N) is looking at ways to fund any acquisition and is willing to work with Musk or any other bidder, while Thoma Bravo has said on Twitter that it is looking into putting together a proposal.
According to the New York Post, Thoma Bravo is in talks with Musk about a collaborative venture. A request for comment from Thoma Bravo was not returned.
On the platform, Musk has made a number of statements, some of which have gotten him in hot water with US regulators.
Musk tweeted in 2018 that he had “funding secured” to take Tesla private for $420 per share, a move that resulted in millions of dollars in fines and his forced resignation as Tesla’s chairman to settle charges from the US Securities and Exchange Commission that he deceived investors.