Elon Musk said he is exploring a tender offer to acquire Twitter shares from shareholders. He also lined up $46.5 billion in financing.
Musk made this decision since Twitter’s board has not responded to his offer to buy the platform.
From the new filing (Reporting Person is Elon Musk):
Twitter has not responded to the Proposal. Given the lack of response by Twitter, the Reporting Person is exploring whether to commence a tender offer to acquire all of the outstanding shares of Common Stock (together with the associated rights issued pursuant to the Rights Agreement (the “Rights” and, together with the Common Stock, the “Shares”)) that are issued and outstanding (and not held by the Reporting Person) at a price of $54.20 per share, net to the seller in cash, without interest and less any required withholding taxes, subject to certain conditions (the “Potential Offer”), but has not determined whether to do so at this time.To finance the Proposed Transaction or a Potential Offer, entities related to the Reporting Person have received commitment letters committing to provide an aggregate of approximately $46.5 billion as follows:(i) A debt commitment letter, dated April 20, 2022 (the “Debt Commitment Letter”), from Morgan Stanley Senior Funding, Inc. and certain other financial institutions party thereto as commitment parties (collectively, the “Commitment Parties”) pursuant to which the Commitment Parties have committed to provide $13 billion in financing to the Reporting Person and related entities as follows: (a) a senior secured term loan facility in an aggregate principal amount of $6.5 billion, (b) a senior secured revolving facility in an aggregate committed amount of $500 million, (c) a senior secured bridge loan facility in an aggregate principal amount of up to $3 billion and (d) a senior unsecured bridge loan facility in an aggregate principal amount of up to $3 billion ((a) – (d) collectively, the “Debt Facilities”);(ii) A separate debt commitment letter, dated April 20, 2022 (the “Margin Loan Commitment Letter”), from Morgan Stanley Senior Funding, Inc. and certain other financial institutions party thereto as commitment parties (collectively, the “Margin Loan Commitment Parties”) pursuant to which the Margin Loan Commitment Parties have committed to provide $12.5 billion in margin loans (the “Margin Loan Facility”), the proceeds of which will be distributed or otherwise made available to Purchaser; and(iii) An equity commitment letter, dated April 20, 2022 (the “Equity Commitment Letter”), from the Reporting Person pursuant to which the Reporting Person has committed to provide equity financing for the Proposed Transaction or the Potential Offer sufficient to pay all amounts payable in connection with the Offer and the Merger (plus related fees and expenses), net of the amounts to be funded pursuant to the Debt Commitment Letter and the Margin Loan Commitment Letter, which is currently expected to be approximately $21 billion (the “Equity Financing”).
Summary: Musk has $25 billion in debt financing from Morgan Stanley, Barclays, Bank of America, BNP Paribas, Mizuho Bank, MUFG, and Société Générale. His shares in Tesla secure about half that amount.
Musk is also committing $21 billion in equity himself. A source told The Wall Street Journal he might bring in an equity partner.
Musk bought more than a 9% stake in Twitter. The board invited him to join, but he would have to cap his stock ownership at 14.9%. He said no.
Then Musk offered to buy Twitter for $54.20 a share, which is about $43 billion. But then Twitter adopted the “poison pill” to stop a hostile takeover.
CNBC’s David Faber said Musk won’t have the ability to “finalize a tender offer for Twitter with the poison pill in place.”
Can Musk do all of this? He would need to concentrate on those who own a ton of Twitter shares like the Saudis. They already said no to his buying offer.
More than likely the board and shareholders want to see a higher price.
Even if Musk accumulates more shares the board can still tell him no. Should they? No. But they have the ability to say no.
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