Elon Musk has brought in new investors to fund his Twitter deal, a filing shows.
Elon Musk has tapped more than a dozen new investors to help fund his $44 billion acquisition of Twitter, including billionaire Larry Ellison and venture capital firm Sequoia Capital, according to filings. securities filed Thursday morning.
Investors will together contribute $7 billion to help fund the Twitter purchase, with the rest coming from Mr. Musk’s own pocket or through loans.
Mr Musk had said he would fund the deal in part with a $12.5 billion loan against his shares in Tesla, the electric vehicle company he runs. Following the new equity commitments, Mr. Musk said he was reducing the amount of this loan against Tesla shares to $6.25 billion from $12.5 billion.
It also said it secured $13 billion in other loans from seven banks and committed $21 billion of its own cash. Mr. Musk has not yet specified the sources of this money.
The 18 investors listed in Thursday’s filing are a mix of big names such as Fidelity as well as so-called family offices – companies that manage the wealth of billionaires and other wealthy people. Binance, the cryptocurrency exchange, is contributing $500 million, while an entity affiliated with Mr. Ellison, the co-founder of Oracle, is investing $1 billion. Sequoia is contributing $800 million and Qatar Holding, a sovereign wealth fund, is contributing $375 million.
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Representatives for Mr. Musk had solicited a wide range of investors in recent days, according to two people who received information about a potential investment. Some traditional private equity firms had previously considered investing in the deal, but were unwilling to invest on the terms offered.
The new funds could give investors more confidence that the deal will be struck as a number of investors have bet against that likelihood, especially given the amount of capital Mr. Musk may personally be responsible for, as well than its unpredictable nature. The deal is not expected to close for three to six months, and Mr. Musk must pay a $1 billion break-up fee if his funding collapses.
“This was a smart financial and strategic move on Musk’s part that will be welcomed 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 partners who could help reduce the roughly $20 billion in cash he has personally committed to the deal. Shares of Twitter rose more than 2% in premarket trading.
On April 14, Mr. Musk made an offer to buy Twitter for $54.20 per share, after accumulating enough stock in the company to be its largest shareholder. He had refused a seat on the board of directors and rejected the restrictions it would have placed on him. At the time, Mr Musk said he had lost faith in Twitter’s management to do what he believed would help the platform achieve its “societal imperative” of free speech.
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The company’s board has adopted a “poison pill,” which is a mechanism to slow down a takeover attempt and buy time. Board members were concerned about the direction Mr. Musk would take for the company and his financing options, as much of his wealth was tied to Tesla shares.
In the weeks leading up to the offer, Mr Musk had suggested that Twitter get rid of advertising, have an open-source algorithm and do more to emphasize free speech principles, among other things. changes.
But on April 25, Mr. Musk struck a deal to buy Twitter for about $44 billion. Twitter’s board of directors had run out of options and Bret Taylor, the chairman, told the company’s 7,000 employees that day that “the board of directors has unanimously decided that the Elon’s offer represented the best value for our shareholders.”
Anupreeta Das and Melina Delkic contributed report.
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