Elon Musk has unveiled a $ 46 billion financing package to fund his takeover bid on Twitter while continuing with a deal that will be one of the largest leveraged buyouts in history.
Tesla’s billionaire CEO has pledged $ 25.5 billion in debt – including a $ 12.5 billion interval loan against his shares in the electric vehicle maker – from a group of banks led by Morgan Stanley, his financial adviser.
Separately, he said he would provide $ 21 billion in equity for the deal, according to paperwork Filed with the Securities and Exchange Commission on Thursday, although it did not provide further details on where that part of the funding would come from.
Securing funding is a crucial milestone for the brilliant entrepreneur who made a A hostile $ 43 billion bid Take Twitter to private last week. Completing a deal would turn Musk into a social media baron with the power to control what he defined as the world baron “De facto Public City Square”.
The San Francisco-based social media group acknowledged that it had accepted Musk’s “updated and non-binding” proposal, but gave no official response other than to say that its board of directors “is committed to conducting a careful, comprehensive and deliberate review” of the proposal.
Twitter’s board has already raised its defenses against Musk, however, and launched a “poison pill” last Friday that will thwart a hostile takeover by preventing anyone from buying more than 15% of Twitter shares on the open market.
Musk is expected to use the financing package to launch a takeover bid for all Twitter shareholders in the coming days, a move that will put pressure on the board of the social media company to negotiate with.
Musk has arranged for a dozen lenders – including Bank of America, Barclays, MUFG and Credit Suisse – to provide $ 62.5 billion in secured debt and collateralized loans against its Tesla shares. The debt package includes a senior bank loan of $ 6.5 billion, a rolling credit line of $ 500 million and $ 6 billion split between secured and unsecured bridging loans from seven of the banks.
Twitter hired JPMorgan Chase and Goldman Sachs to advise her on the hostile offer.
Now that Musk has put together an initial financing package, private equity investors will consider whether to try to participate in the financing package, whether as debt holders or as equity partners.
Lenders in the private credit market told the Financial Times that they expect it to be able to absorb debts of up to $ 10 billion and billions more in preferred equity liabilities.
Given the risk of the $ 13 billion debt used to finance the deal, many of the banks financing the offer are likely to try to quickly sell that debt to third-party investors, including private credit executives like Apollo Global Management.
The software acquisition group Thoma Bravo has also considered taking part in the acquisition of Twitter, but it has not yet said whether it intends to continue or would be interested in working with Musk.
Other large lenders like Blackstone Credit were waiting for a funding package to appear before deciding whether to participate, said people who know their thinking.
Taking private Twitter remains a controversial investment in the acquisition industry, with some of the industry’s biggest players like Blackstone, Vista Equity Partners and Brookfield Asset Management unwilling to participate in a capital offer, sources told FT.
Silver Lake and Elliott Management, two major shareholders who supported Twitter CEO Farag Agrwal, when he took over from co-founder Jack Dorsey in November, have not said whether they have an interest in participating in Musk’s bid.
Twitter shares rose most often in mid-morning trading on Thursday.
With further reporting from Sujeet Indap
Elon Musk unveils $46bn financing package to fund Twitter bid Source link Elon Musk unveils $46bn financing package to fund Twitter bid