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For Elon Musk’s takeover effort of Twitter, it’s “Funding Secured.”
The billionaire said in a new securities filing Thursday that he had secured the $43 billion or so he would need to acquire Twitter for $54.20 per share, and that he is weighing a tender offer to acquire the company for that price.
If Musk follows through with the tender offer, he would publicly offer to buy any shares of Twitter for his $54.20 price (or a higher price to be determined later). Shareholders could then choose to take the offer, or hold on to their shares. If a majority of shareholders take the deal (including the stake Musk owns) he can effectively gain control of the company … though the recent poison pill instituted by Twitter could throw a wrench in that plan.
In fact, Musk’s filing indicates that he is prepared to negotiate directly with Twitter’s board: “The Reporting Person is seeking to negotiate a definitive agreement for the acquisition of Twitter by the Reporting Person and is prepared to begin such negotiations immediately,” the filing says. With financing now lined up, Twitter’s board will likely need to seriously evaluate the offer.
Musk’s takeover effort (which appears to be codenamed “Project X,” according to the filing is being financed by two debt commitment letters led by Morgan Stanley and backed by other institutions, as well as an equity commitment letter, in total raising about $46.5 billion.
In 2018, Musk tweeted: “am considering taking Tesla private at $420. Funding secured.” That tweet would lead to a flurry of lawsuits because he had not, in fact, secured the funding. This time, however, he does have the cash lined up for his 4/20-themed bid.
The latest move continues the surprise takeover effort by Musk, the CEO of Tesla and SpaceX, and the world’s richest person.
Musk said at the TED conference on April 14 that he wanted to acquire Twitter because it had “become kind of the de facto town square, so it is just really important that people have the reality and the perception that they are able to speak freely within the bounds of the law.”
“This is not a way to make money, my strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization, I don’t care about the economics at all,” he added.
Musk began acquiring shares in Twitter in late January, but publicly disclosed his just over 9 percent stake (worth about $2.9 billion) on April 4, sending the stock soaring (Musk would subsequently face a lawsuit from investors over his disclosure, which he filed late). The company would offer Musk a board seat, but he would decline it a few days later, with CEO Parag Agrawal warning employees that there “will be distractions ahead.”
While Musk was regularly soliciting ideas for how to “fix” Twitter on his account, he would go from being a passive shareholder to an active one the following week, making an offer to acquire Twitter for $54.20 per share, valuing the company at just over $43 billion.
“Since making my investment, I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company,” Musk wrote to Twitter board chair Bret Taylor in a text message. “Twitter has extraordinary potential. I will unlock it.”
The company would go on to adopt a “Poison Pill” plan, meant to stave off a hostile takeover attempt, and forcing Musk and any other potential buyers that they will need to negotiate with the board if they are serious about the offer.
Musk said at TED that he had a “Plan B” if he was unable to acquire the social media company.
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