- Elon Musk can set aside up to $15 billion of his own money to buy Twitter, the New York Post reported.
- Despite his wealth, Musk needs financial backing from banks or other investors to finance such a huge deal.
- He will also have to deal with Twitter’s “poison pill” defense.
Elon Musk is scrambling to put together his takeover bid for Twitter.
According to a report in the New York Post on Tuesday, citing two unnamed sources, Musk may be willing to set aside up to $15 billion of his own money to help fund a purchase.
He is also asking Morgan Stanley to help him raise another $10 billion in debt, the New York Post reported, aiming to launch a public offering in about 10 days. The New York Times separately reported Wednesday that Morgan Stanley is helping Musk get debt rather than equity financing for his offering. An SEC filing last Wednesday confirms that the bank is advising Musk.
The billionaire, whose net worth was $261 billion as of Wednesday, according to Bloomberg estimates, will likely need considerable financial backing to close such a massive deal.
Some large acquisition groups have refused to provide shares to Musk, the Financial Times reported on Wednesday, naming Blackstone Group, Vista Equity Partners and Brookfield Asset Management.
Among the concerns reported are Twitter’s long-term growth and profitability prospects and Musk’s independent personality. The billionaire aggressively tweeted about his plans for the platform, including loosening moderation on content and not paying board members.
Other institutions are considering increasing debt or financing preferred stock, the paper added.
Some investors, such as Apollo Global Management and Thoma Bravo, have expressed interest in participating in a bid via Twitter, Reuters and the Wall Street Journal reported earlier this week.
Musk has not publicly detailed how he plans to fund his proposed takeover of Twitter. Tesla’s CEO made an unsolicited offer to buy Twitter for $54.20 a share, according to an April 14 U.S. Securities and Exchange Commission filing, valuing a potential deal at $43 billion. He claimed on April 15 that he has enough assets to fund the purchase without giving further details.
Musk and Tesla did not immediately respond to Insider questions. Morgan Stanley did not immediately respond to Insider.
Blackstone Group, Vista Equity Partners and Brookfield Asset Management did not immediately respond to Insider questions.
Even if Musk manages to make a formal offer, he still has to deal with Twitter’s “poison pill,” a defense mechanism the board created to prevent any investor from acquiring more than 15% of the company.
Once an investor such as Musk crosses that threshold, the plan will allow all other shareholders beginning April 25 to exercise the rights to purchase a share of Twitter shares at an exercise price of $210, with the objective of diluting the participation of the larger investor. .
Musk is currently the largest single shareholder in Twitter, after building a stake in the company equivalent to 9.1% of the company.