We just found out how Elon Musk may finance his $43B Twitter bid
In an SEC filing now, Elon Musk indicated that Twitter has but to react to his present to purchase the company, and that he is “discovering whether to start a tender offer you to obtain all of the remarkable shares.” Recall that Twitter has alone adopted a poison-tablet defense of its equity in light-weight of Musk’s unsolicited bid.
The filing also particulars how Musk intends to pay back for Twitter. Recall that his offer is value $54.20 for each share in income, valuing the business at all around $43.4 billion. The serial entrepreneur’s bid signifies a high quality to Twitter’ price nowadays, but lands far beneath the firm’s 52-week stock market large of $73.34 for each share shares of Twitter traded even bigger in early 2021, leaving some room for Musk’s bid to be considered modest, in spite of its existing-day premium.
So where will all that funds appear from? A few big buckets, it turns out:
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The 1st tranche, for each the submitting, arrives from Morgan Stanley and “specified other financial institutions” that have “committed to present $13 billion in funding” to Musk in the type of a $6.5 billion “senior secured phrase financial loan facility,” a $500 million “senior secured revolving facility,” a $3 billion “senior secured bridge bank loan facility” and a $3 billion “senior unsecured bridge financial loan facility.”
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The 2nd bucket of funds will come from, once once again, Morgan Stanley and many others that have “committed to give $12.5 billion in margin loans” to Musk, in opposition to what we presume are his shares in Tesla and other companies.
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And, third, an “equity dedication letter” from Musk to “offer fairness funding for the Proposed Transaction or the Opportunity Present sufficient to pay all quantities payable in connection with the Give and the Merger” internet of the higher than funding resources. The full benefit of this equity commitment from Musk is “envisioned to be approximately $21 billion,” the submitting states.
To summarize: Musk intends to borrow all around $13 billion in different fashions borrow $12.5 billion in opposition to his personal equity holdings and pay back around $21 billion from his possess holdings. It is really a relatively sophisticated selection of funding resources, but Musk’s bid is rarely modest, so the path to accumulating the needed money in one pile is understandably convoluted.
Do not think about the earlier mentioned “funding secured” notes as indicator that the offer is a slam-dunk. Twitter has its back again up over the bid, and Musk’s submitting states plainly that “there can be no assurance that a definitive arrangement with respect to the Proposed Transaction will be executed or, if executed, irrespective of whether the Proposed Transaction will be consummated,” and that Musk has “not commenced, or identified to commence, any tender offer you for Shares of Twitter” fairly yet.
Much more to occur, in other words, but Musk does seem to have a way to the cash he desires to make his bid additional than just phrases.