Elon Musk is shoring up his finances ahead of the regulatory approval required to close the Twitter deal. After Twitter board approved Musk’s buyout offer late last month, there was always this possibility of the world’s richest man walking away from the deal. However, the latest filing from Musk suggests he will go through with this deal.
As part of the buyout agreement, Musk is valuing Twitter at $44B and is offering to pay $54.20 per share. Based on Twitter’s closing price recently, the micro-blogging platform is still trading at a 10 per cent discount to the agreed takeover price.
Elon Musk finds Twitter investor friends
When Twitter board accepted Elon Musk’s buyout offer, the eccentric chief of Tesla had offered a financing option wherein he planned to raise $21B in the form of equity financing and another $25.5B in the form of debt financing through Morgan Stanley Senior Funding and other firms.
Musk had revealed in a filing that out of his $21B equity financing option, he included $12.5B in loan against his stock in Tesla. Now, the world’s richest man has revealed that he found friends who are willing to support his endeavour to take the micro-blogging platform private.
On Thursday, Elon Musk disclosed a group of co-investors in his Twitter takeover and the names are nothing short of being impressive. The world’s richest man has secured around $5.2B in equity commitments from 18 investors while Saudi Prince Alwaleed bin Talal has offered roll over of nearly 35 million Twitter shares.
These equity commitments are not big but show Musk’s ability to attract like minded people and organisations to back him. Larry Ellison, founder of Oracle and major Tesla shareholder, is commitming $1B to Elon’s cause while Sequoia Capital and VyCapital are offering $800M and $700M, respectively.
Elon Musk has also received a $500M commitment from Binance while Andreessen Horowitz is committing $400M. Other backers include Baron Capital, DFJ Growth, Fidelity, and the sovereign wealth fund of Qatar. It is not clear whether Twitter co-founder and noted Musk supporter Jack Dorsey plans to roll over his 2.4 per cent stake but the SEC filing says the discussion is ongoing.
A list of commitments filed with SEC
- Lawrence J. Ellison Revocable Trust: $1B
- Sequoia Capital Fund, L.P.: $800M
- VyCapital: $700M
- Binance: $500M
- AH Capital Management, LLC: $400M
- Qatar Holding LLC: $375M
- Aliya Capital Partners LLC: $350M
- Fidelity Management & Research Company LLC: $316M
- Brookfield: $250M
- Strauss Capital LLC: $150M
- BAMCO, Inc.: $100M
- DFJ Growth IV Partners, LLC: $100M
- Witkoff Capital: $100M
- Key Wealth Advisors LLC: $30M
- A.M. Management & Consulting: $25M
- Litani Ventures: $25M
- Tresser Blvd 402 LLC: $8.5M
- Honeycomb Asset Management LP: $5M
Elon Musk plans to become interim CEO
In another twist, Elon Musk is reportedly planning to become interim CEO of Twitter once the takeover is complete. According to CNBC, Musk is looking to serve as temporary CEO of Twitter for a few months after the takeover.
This could mean that Twitter CEO Parag Agrawal will be asked to depart post the finalisation of the deal. Agrawal has led the company for only a few months after Dorsey departed from CEO role last November. While the focus had always been around how Musk will finance the deal, the attention is now shifting towards his possible strategy.
It seems Musk plans to lead from the front by becoming temporary CEO of the micro-blogging platform. Reuters reported last month that Musk had lined up a new CEO for Twitter and Agrawal had said that the future of Twitter is uncertain under Musk.
For Musk, one of the immediate challenges will be paying Twitter employees for their stock compensation. Agrawal also stands to benefit if he loses the role of CEO. A report claimed that he will stand to gain $42M if he is terminated within a year of takeover or acquisition. Elon Musk has multiple roles at Tesla and SpaceX, and by becoming temporary CEO of Twitter, he seems preparing for more challenges.