Musk sets up financing to buy Twitter; billionaire plans to make a takeover bid

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Elon Musk is like everyone else. The world’s richest man with a net worth of around $270 billion is looking to use mostly OPM (other people’s money) when it comes to his $43 billion cash offer for buy Twitter. According to a filing submitted to the Securities and Exchange Commission (SEC), Musk has received $46.5 billion in funding commitments and plans to make a tender offer for shares of the social media company.

Musk has filed Form 13D with the SEC and is considering a takeover bid

The $46.5 billion includes $25.5 billion in debt from Morgan Stanley and it has commitments for $21 billion in equity financing, which could include $10 billion to $15 billion of its own cash. CNBC reports that other companies involved in the financial package include Bank of America, Barclays, MUFG, Societe Generale, Mizuho Bank and BNP Paribas. If Musk decides to make a tender offer, he will issue a public announcement offering to buy a certain number of shares at a specific price.

A takeover bid is usually made in conjunction with a hostile bid on a company since shareholders vote with their wallets on whether or not to accept a takeover. Twitter’s board is not interested in the company being bought by Musk for $54.20 per share and instead the board has announced that it will implement a poison pill.

A poison pill is used by a company that does not want to be taken over and is usually activated when a hostile bidder exceeds a certain shareholding percentage, causing the targeted company to take action to dilute the company’s holdings. bidder. For example, in this situation, the Twitter board says that once someone buys 15% of Twitter stock without board approval, all other Twitter shareholders will be allowed to buy more twitter shares with big discount.
This will not only dilute Musk’s holdings, but will also hurt the company’s valuation. But that would prevent Musk from completing a takeover bid. Musk teased the possibility of a takeover bid when he released a tweet that read cryptically, “Love Me Tender.” Not only was the Tesla CEO referring to the Elvis song, but he was also hinting at future plans to possibly make a tender offer for Twitter shares.

Shareholders remain skeptical about the deal

Musk, who is one of the most popular figures on Twitter with 81 million followers, originally announced that it had purchased 9.2% of Twitter shares on April 14. He was then offered a seat on the company’s board of directors as long as he bought no more than 14.9% of Twitter shares. The multi-billionaire declined the invitation and instead made an offer to take the company private, an offer that Twitter, as we’ve pointed out before, rejected.

Twitter continues to trade under Musk’s $54.20 offer, indicating there is some skepticism among traders about Musk’s ability to close the deal. For example, the stock closed today at $47.08 after gaining 36 cents or 0.77% during normal trading hours. In after-hours trading, Twitter shares added another 58 cents or 1.23% to $47.66.

Sources familiar with Musk’s plans say he will launch a takeover bid in about a week and a half. Things are moving fast, and it looks like Musk is seriously considering buying the company.

Twitter was founded by Jack Dorsey and three others and launched in June 2006. The timing was right because the era of the touchscreen smartphone was about to take place. Twitter was available for iPhone, iPad, Android, Windows 10, Windows Phone, BlackBerry and the Nokia S40.

Twitter has been the subject of takeover rumors before. In September, rumors swirled that several companies approached the company about a takeover. These companies were supposed to be parent Alphabet of Google, Microsoft, Salesforce.com. Verizon and Walt Disney. None of these companies have taken to Twitter as much as Musk. Potential buyers would have been discouraged because of all the bullying and harassment that users were subjected to on the site.

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