Musk has closed the $44bn deal announced in April to take Twitter private and took ownership of the influential social media platform by firing top executives
28 October 2022 - 15:25
by Hyunjoo Jin and Chibuike Oguh
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Elon Musk on Thursday closed the $44bn deal announced in April to take Twitter private and took ownership of the influential social media platform by firing top executives immediately.
“The bird is freed,” he tweeted in an apparent nod to his desire to see the company has fewer limits on content that can be posted. But Musk provided little clarity on how he will achieve his goals.
Earlier this month, Musk brought the deal back on the table after previously trying to walk away from it. Musk had said he was excited to buy Twitter but he and his co-investors are overpaying.
What was his financing plan?
Musk pledged to provide $46.5bn in equity and debt financing for the acquisition, which covered the $44bn price tag and the closing costs. Banks, including Morgan Stanley and Bank of America, committed to provide $13bn in debt financing.
Experts have said commitments from banks to the deal were firm and tight, limiting their ability to walk away from the contract despite the prospect that they may face major losses.
Musk’s $33.5bn equity commitment included his 9.6% Twitter stake, which is worth $4bn, and the $7.1bn he had secured from equity investors, including Oracle co-founder Larry Ellison and Saudi Prince Alwaleed bin Talal.
That had left Musk in need for an additional $22.4bn of funds to cover the equity financing portion of the deal.
Since the co-backers were revealed, Apollo Global Management and Sixth Street Partners have pulled their offers from the table.
From Musk’s own pocket
Musk, 51, is the world’s richest person with a net worth of $222bn , according to Forbes, but a large portion of his fortune is tied to his stakes in Tesla and Space X.
According to a Reuters calculation, Musk had about $20bn cash after selling part of his stake in Tesla through multiple transactions in November and December last year and April and August.
Musk would have needed to raise an additional $2bn to $3bn to complete the financing for the deal.
What about the shortfall?
It was not immediately clear how Musk covered a gap of about $3bn in financing. Wedbush analyst Daniel Ives said it could be outside capital as no Form 4s were filed this week and it could likely be an investor already backing the deal.
Musk was widely expected to sell more of his Tesla shares in the nine-day window between the electric automaker’s results on October 19 and the October 28 deadline to close the deal. A sale has not been notified so far.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Is this how Elon Musk funded his Twitter deal?
Musk has closed the $44bn deal announced in April to take Twitter private and took ownership of the influential social media platform by firing top executives
Elon Musk on Thursday closed the $44bn deal announced in April to take Twitter private and took ownership of the influential social media platform by firing top executives immediately.
“The bird is freed,” he tweeted in an apparent nod to his desire to see the company has fewer limits on content that can be posted. But Musk provided little clarity on how he will achieve his goals.
Earlier this month, Musk brought the deal back on the table after previously trying to walk away from it. Musk had said he was excited to buy Twitter but he and his co-investors are overpaying.
What was his financing plan?
Musk pledged to provide $46.5bn in equity and debt financing for the acquisition, which covered the $44bn price tag and the closing costs. Banks, including Morgan Stanley and Bank of America, committed to provide $13bn in debt financing.
Experts have said commitments from banks to the deal were firm and tight, limiting their ability to walk away from the contract despite the prospect that they may face major losses.
Musk’s $33.5bn equity commitment included his 9.6% Twitter stake, which is worth $4bn, and the $7.1bn he had secured from equity investors, including Oracle co-founder Larry Ellison and Saudi Prince Alwaleed bin Talal.
That had left Musk in need for an additional $22.4bn of funds to cover the equity financing portion of the deal.
Since the co-backers were revealed, Apollo Global Management and Sixth Street Partners have pulled their offers from the table.
From Musk’s own pocket
Musk, 51, is the world’s richest person with a net worth of $222bn , according to Forbes, but a large portion of his fortune is tied to his stakes in Tesla and Space X.
According to a Reuters calculation, Musk had about $20bn cash after selling part of his stake in Tesla through multiple transactions in November and December last year and April and August.
Musk would have needed to raise an additional $2bn to $3bn to complete the financing for the deal.
What about the shortfall?
It was not immediately clear how Musk covered a gap of about $3bn in financing. Wedbush analyst Daniel Ives said it could be outside capital as no Form 4s were filed this week and it could likely be an investor already backing the deal.
Musk was widely expected to sell more of his Tesla shares in the nine-day window between the electric automaker’s results on October 19 and the October 28 deadline to close the deal. A sale has not been notified so far.
Reuters
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