Elon Musk Races to Secure Financing for Twitter Bid

Elon Musk is scrambling to secure funding for his $ 43 billion bid to buy Twitter.

An investment bank working with Mr. Morgan Stanley. On potential deals, Musk called on banks and other potential investors to increase lending for the offer, said four people familiar with the situation. Mr. Musk is primarily focused on raising debt and has not yet begun obtaining equity financing for its bids, one source said.

Mr. Musk is evaluating a variety of debt packages, including a more senior debt known as preferred debt and a loan against its share of electric car maker Tesla, which operates it, the two said. Apollo Global Management, a private equity firm, is among the parties considering offering debt financing in a bid for Twitter.

Mr. Musk aims to pull the full-fledged offer together as soon as this week, one person said, although the timeline is not fixed. People with knowledge of the discussions were not authorized to speak in public because the details are confidential and in flow.

It is not clear whether Mr. Musk’s efforts will be successful, but he will go on to address the main question about his Twitter bid. Last week, Mr. Musk, the world’s richest man, made an unsolicited offer to a social media company, saying he wanted to take it private and that he wanted people to be able to talk more freely on the service. But his offer was viewed with suspicion by Wall Street because it did not include details on how the money would come for the deal.

While Twitter’s board has not rejected Shree. Musk’s offer, he responded days later with a defensive tactic known as a “poison pill”. The poison pill effectively treats Mr. Musk owns more than 15 percent of Twitter. The 50-year-old was building a stake in the company and owned more than 9 percent of Twitter, making him its largest individual shareholder.

Mr. Musk, whose net worth is reported to be $ 255 billion, did not respond to a request for comment. On Tuesday, a curtain sign appeared on Twitter, tweeting his thoughts about social networks and their policies.

Morgan Stanley declined to comment. Twitter, which also declined to comment, is expected to provide an update on its deal-making prospects when it reports quarterly earnings on April 28.

Tesla did not return a request for comment. It is unknown at this time what he will do after leaving the post. Musk’s move to potentially borrow against the company’s shares; Some of its largest shareholders declined to comment. The automaker will report quarterly earnings on Wednesday. Mr. Musk often speaks to investors during Tesla’s earnings call.

The deal for Twitter, if designed as a traditional leveraged buyout, would be the largest such deal in at least the last two decades and would be difficult for any buyer to lend. That’s because Twitter doesn’t have the financial profile that characterizes debt-fueled acquisitions.

In most leverage buyout deals, companies have large and steady cash flows. But Twitter’s business has been inconsistent, with revenue growth slowing. Excluding expenses such as interest, it earns only $ 1 billion annually, and financiers generally hate to pile up excessive debt with companies that generate that size.

There are also special obstacles for Mr. Musk. In 2018, Mr. Musk tried to take Tesla privately and tweeted that “funding is secure,” further pushing Tesla’s shares. He did not have the financing for such a deal. The Securities and Exchange Commission later filed a securities fraud case against him, accusing him of misleading investors. Mr. Musk paid a 20 million fine and agreed to step down as chairman of Tesla for three years.

Some investors are wary of getting involved in Mr. Lending. Concerned neo-hippies and their global warming, i’ll tell ya. It is also risky for banks to offer loans against Tesla stock, given the volatility of the stock.

Mr. Musk has not publicly stated his business plan for Twitter, although he has spoken out against reversing Twitter’s moderation policies and providing additional transparency in how its algorithms work. He makes it clear that profit is not his focus, and that potential investment efforts with traditional Wall Street financiers are complex.

“There is no way to make this money,” Mr. Musk said in an interview at a TED conference last week. “My strong instinctive understanding is that it is extremely important to have a public platform that is as reliable and comprehensive as possible.”

Mr. Musk’s offer for Twitter is $ 54.20 per share. Some analysts say the company’s board is likely to accept offers of just $ 60 per share or more. Twitter’s share price rose above $ 70 per share when the company announced its earnings target last year, although its stock has fallen to around $ 45 as investors question its ability to meet those targets.

Mr. Musk, who began accumulating Twitter shares in January, was invited to join the company’s board this month. At the time, Twitter chief executive Parag Agarwal and other board members said they welcomed Mr. Musk saw the use of his platform as a director. Mr. Musk has more than 82.5 million Twitter followers and frequent tweets.

Mr. Musk and Mr. Agarwal also shares similar views on how to decentralize Twitter so that users gain more control over their social media feeds, a tactic that both men see as a way to promote more free speech. The move will also reduce the burden on Twitter, which has faced questions about toxic content and misinformation, to determine which posts can continue and what should be removed.

But then Mr. Musk rejected the board meeting and began trying to take over the company.

Twitter, which has brought in advisers to Goldman Sachs and JPMorgan Chase, is also weighing whether to invite bids from other potential buyers, said two people close to the company. At least one interested party, private equity firm Thomas Bravo, has emerged, although it is unclear whether it will eventually submit an offer.

Kate Conger, Mike Isaac And Jack Ewing Contribution Report.

Similar Posts

Leave a Reply

Your email address will not be published.