Elon Musk has secured $46.5bn (£35.6bn) in funding to fund a potential hostile bid for Twitter and is putting up $21bn of his own money as part of the package.
Musk also confirmed that he will raise another $12.5 billion for the offering through a margin loan secured by his shares in Tesla, the electric carmaker he leads as chief executive. Morgan Stanley, the US investment bank, leads a group of financial institutions providing $13 billion in debt financing.
The funding commitments were outlined in a filing Thursday with the US financial watchdog, the Securities and Exchange Commission. The document confirmed that the world’s richest man was “exploring whether to initiate a takeover bid” for shares of Twitter that he does not own. Musk already owns 9.2% of the social media platform and announced a $54.20 per share offer last week.
A takeover bid is considered a “hostile” offer because it bypasses the company’s board, which in a conventional takeover situation would be expected to recommend an offer to shareholders. Instead, Twitter’s board of directors has moved to block Musk from increasing his shareholding without its approval.
Last week, Twitter launched a so-called poison pill defense against Musk’s bid, aimed at preventing the Tesla CEO from taking more than a 15% stake in the business. The tactic, commonly used by company boards as a bulwark against unwanted approaches, will allow existing investors in Twitter to buy shares at a deep discount if someone tries to buy more than 15% of Twitter without board backing.
This would dilute the shareholding of an unwelcome bidder like Musk and is a significant block to any bid not approved by the board. However, shareholders who support Musk’s approach could force the board to abandon the poison pill gambit.
“This will put pressure on the board if a wave of shareholders offer their shares and could force a removal of the poison pill and a sale to Musk,” said Dan Ives, a senior analyst at US financial firm Wedbush Securities.
Musk, who has more than 82 million followers on Twitter and is a prolific user of the platform, hinted over the weekend that he was considering a soft approach.
Twitter has yet to formally respond to Musk’s $43 billion offer submitted last week, aside from announcing the poison pill move.
In a statement on Thursday, the company said: “We have received the updated, non-binding proposal from Elon Musk, which provides additional information on the original proposal and new information on potential funding.
“As previously announced and communicated directly to Mr. Musk, the board is committed to conducting a careful, comprehensive, and deliberate review to determine the course of action it believes is in the best interest of the company and all of Twitter’s shareholders.” .
Musk, a self-described “free speech absolutist,” has made it clear that he believes the microblogging site is not giving users free rein. Revealing his acquisition approach last week, Musk said in a letter to the board that Twitter is “the platform for freedom of expression around the world” but cannot achieve this “social imperative” in its current form and ” needs to transform itself as a private company. ”.
Before launching his takeover bid, Musk had outlined a number of changes he could bring to the company, some more likely than others, including introducing an edit button for tweets and turning Twitter’s San Francisco headquarters into a shelter for the homeless. The last suggestion, later removed by Musk, was supported in a tweet by the second richest man in the world, Jeff Bezos.
Shares on Twitter rose 0.5% to $46.95 in response to Musk’s latest presentation.