Tesla CEO Elon Musk has lined up $46.5 billion in financing for a possible hostile takeover of Twitter and is “exploring” a direct tender offer to shareholders, according to a securities filing released on April 21.
Musk’s filing pointed to a $13 billion debt facility from a financing consortium led by Morgan Stanley, a separate $12.5 billion margin loan from the same bank, as well as $21 billion from Musk’s personal fortune.
The Tesla chief, who has been rebuffed by the Twitter board, is “exploring whether to commence a tender offer… but has not determined whether to do so at this time,” the filing said.
Still, shares of Twitter did not rise significantly, suggesting skepticism that a deal will happen.
The world’s richest man on April 14 launched an unsolicited bid to buy Twitter for $54.20 a share, saying the influential microblogging platform had fallen short of free-speech imperatives.
The following day, Twitter moved to defend itself against the $43 billion takeover effort, announcing a “poison pill” plan that would make it harder for the billionaire to get a controlling stake in the social media company.
Despite Musk’s great wealth, the question of financing had been seen as a potential stumbling block because much of Musk’s holdings are in Tesla shares rather than cash.
Shares of Twitter fluctuated on April 21, finishing at $47.08, up 0.8 percent but far below the $54.20 price in Musk’s offer. That suggests investors remain skeptical a deal will happen, said Eric Talley, a professor a Columbia Law School specializing in corporate law and mergers.
“I think a lot of people feel like either the board isn’t going to start talking to Elon Musk,or that Elon Musk might just decide to chase a different rainbow the day after tomorrow, and this will all have been a big fever dream,” Talley told AFP.
Analysts noted that Twitter’s poison pill poses a big challenge to any effort not backed by the board.
The defense established by Twitter kicks in if an investor buys more than 15 percent in shares without the directors’ agreement. Musk holds 9 percent.