Musk Secures $46.5 Billion Funding For Twitter Takeover

Elon Musk continues to progress his hostile takeover bid for Twitter, after he secured funding for his “best and final” cash offer of $43bn for the platform.

Musk revealed he had secured the funding in a filing on Thursday with the US financial watchdog, the Securities and Exchange Commission.

In this filing, Musk revealed he has committed to stump up $33.5 billion – made up $21 billion of his own money, plus a further $12.5bn via a loan secured against his shares in Tesla.

Hostile takeover

Banks, including Morgan Stanley, have agreed to provide another $13 billion in debt secured against Twitter itself, the filing states.

Musk has been hinting he had a plan B in store for over a week now, if Twitter’s board rejected his “best and final” takeover offer.

That plan B will likely see Musk approach Twitter shareholders directly, bypassing the board.

And going to Twitter shareholders has been confirmed in the latest SEC filing.

Musk’s offer however is being opposed by at least one noted Twitter shareholder, namely Saudi Arabia’s Prince Alwaleed bin Talal.

The prince has a long term stake in Twitter via his investment firm Kingdom Holding Company, which holds 5.2 percent of Twitter.

Poison pill

Last week on Good Friday, as Twitter’s board of directors considered Musk’s hostile takeover bid, the social networking firm implemented a limited-duration ‘shareholder rights plan’ (a so called poison pill) that could stall or prevent Musk’s takeover attempt.

The poison pill would dilute anyone amassing a stake in the company of more than 15 percent by selling more shares to other shareholders at a discount.

Known formally as a shareholder rights plan, the poison pill will be in place for 364 days.

Musk is Twitter’s second-largest shareholder with a 9.1 percent stake, and has said that he would make big changes at the micro-blogging company.

Musk declined, at the very last minute, an invitation to join Twitter’s board of directors.

Twitter is currently valued at $35.8bn, and its share price has rose slightly to $46.90 (a 0.17 percent rise), as of 7.30pm BST on Thursday evening.

Twitter response

Meanwhile a spokesperson for Twitter acknowledged to Reuters receipt of Musk’s proposal.

“As previously announced and communicated to Mr. Musk directly, the board is committed to conducting a careful, comprehensive and deliberate review to determine the course of action that it believes is in the best interest of the company and all Twitter stockholders,” the Twitter representative was quoted as saying in a statement.

Musk’s move of revealing his funding will add to the pressure on Twitter’s board of director, a financial expert told Reuters.

“I suspect it will put pressure on Twitter’s board to either find a White Knight, which is unlikely, or negotiate with Musk to obtain a higher value and remove the poison pill,” Josh White, assistant professor of finance at Vanderbilt University and a former financial economist for the SEC, told Reuters.

Meanwhile, there are reports that other private equity groups are potentially interested in participating in a deal for Twitter.

Last week it was reported that Thoma Bravo, a tech-focused private equity firm, had informed Twitter that it is exploring the possibility of putting together a bid.

Reuters has now said that Apollo Global Management is also considering ways it can provide financing to any deal and is open to working with Musk or any other bidder.