– Elon Musk is increasing his direct contribution to buy Twitter
Elon Musk announced on Wednesday that he had further reduced the amount borrowed from banks to buy the social network Twitter.
Elon Musk increased the amount that the entrepreneur and his partners had brought directly to the Twitter acquisition to $33.5 billion (approximately CHF32.2 billion), thereby further reducing the amount of loans to the banks, an announcement that the Investors pleased.
Following the announcement, Bluebird Group’s action rose in after-market trading on Wall Street. By midnight, the stock was up more than 5%. Tesla’s chief executive, who originally underwrote 25.5 billion loans, cut those loans to $13 billion, according to a document registered by the United States Securities and Exchange Commission (SEC) on Wednesday, greatly easing his financial burden.
At the beginning of May, several of Twitter’s existing shareholders had already agreed to contribute their shares to the transaction and thus remain a minority stake even after the company’s delisting. Valuing their titles reduced the envelope Elon Musk had to put on the table.
On Wednesday, the SpaceX founder announced it had received new direct commitments that allowed it to further reduce borrowings raised for the acquisition by an additional $6.25 billion. He did not say whether that amount came in whole or in part from his private fortune or whether other investors had joined him.
But he said he’s in talks with several people, including co-founder and former CEO Jack Dorsey, to bring them on board and receive their contribution in either cash or Twitter stock, which could further reduce the amount borrowed.
“Elon Musk is simply changing the funding structure. It’s a step forward, it partially eases the pressure on the debt side,” Wedbush expert Dan Ives commented on Twitter. “The high stakes poker game continues. The odds of the deal going through are now 50/50, down from 40/60, in our view,” he added.
The $12.5 billion in loans that were ultimately not needed had worried some analysts because they were loans backed by Tesla securities. In doing so, they established a connection with the automaker that the market disliked. Since revealing Elon Musk’s involvement in Twitter’s Capital in early April, the group has lived to the rhythm of the case’s many twists and turns.
As of Tuesday, the deal had fallen to $35.40, or 35% less than the price the fiery entrepreneur officially proposed in mid-April and later confirmed by the board. A shift that Wall Street is interpreting as an illustration of investors’ doubts about the prospects for the takeover’s success.
One less ally
Those doubts have been fueled by the multi-billionaire himself, who has been hot and cold over the past week. In particular, he announced that he would suspend operations because he wanted to make sure “that spam and fake accounts really make up less than 5% of the number of users”. Before reaffirming its commitment to acquiring the social network.
Twitter boss Parag Agrawal took the floor to detail measures taken to combat fake accounts, and Elon Musk responded with several messages, including a simple laughing poop emoji. On Wednesday, during the group’s annual general meeting, shareholders voted against the re-election of Egon Durban, co-CEO of the Silver Lake investment fund and ally of the Tesla boss, in the CA.
The issue of the buyout was not raised during the AGM. The vote of shareholders on Elon Musk’s offer must be the subject of an extraordinary general meeting, on a date not known at this time. Tensions between Twitter management and the world’s richest man have multiplied since early April. The CA had initially attempted to prevent the transaction before bowing down.