Elon Musk on Thursday said he has lined up commitments worth $46.5 billion to finance a Twitter takeover deal, one week after he first made a public offer to buy the social media company.
Musk said he has commitment letters to finance the deal, including two debt commitment letters from Morgan Stanley and other unnamed financial institutions and one equity commitment letter from himself, according to a filing with the Securities and Exchange Commission on Thursday.
Musk said in the filing that he has yet to receive any formal response from Twitter’s board to his offer to acquire all of its shares that he does not currently own for $54.20 a piece, a deal that would value the company at around $41 billion. He said he is “seeking to negotiate” a definite acquisition agreement and “is prepared to begin such negotiations immediately” — an apparent reversal from his statement in his acquisition offer letter that it would be his “best and final” offer.
Questions about whether Musk would actually be able to finance his acquisition of Twitter swirled in the days following his takeover bid, especially after he said in an interview the day of his offer that, “I’m not sure I’ll actually be able to acquire [Twitter].”
Although he is the richest person in the world, much of Musk’s wealth is tied up in Tesla stock, and some followers of the company speculated that it could be challenging for Musk to raise debt against the historically volatile stock.
While Twitter’s board has not formally responded to Musk’s offer, it implemented a so-called poison pill on Friday, a defensive measure that could make it harder for him (or any other investor) to buy or take a controlling stake in the company without its approval.
Musk said in his Thursday filing that he is “exploring” whether to launch a tender offer — a move to buy Twitter stock en masse directly from shareholders that could put additional pressure on the board — but “has not determined whether to do so at this time.” Musk has previously alluded to the possibility of a tender offer in several recent tongue-in-cheek tweets, including one with a fill-in-the-blank word followed by “is the night.”
Morgan Stanley did not immediately respond to requests for comment. In a statement, Brenden Lee, a spokesperson for Twitter, said the company had received the “updated, non-binding proposal” from Musk and the “new information on potential financing.”
“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,” Lee said.
Twitter (TWTR) stock rose about 1% to just over $47 on Thursday morning following the filing before giving up those gains. It remains well below Musk’s offer of $54.20 per share, which may indicate some investor skepticism about the likelihood that the deal will go through.
Musk previously found himself in hot water after he claimed on Twitter in 2018 that he had secured financing to take Tesla (TSLA) private at $420 per share, when the agency said he in fact did not. Musk ultimately agreed to a $20 million settlement with the SEC, which stipulated he step down as the chairman of Tesla (TSLA)’s board and have certain tweets about the company pre-approved by lawyers. (Musk recently doubled down on saying that he did have funding secured, prompting a court filing from a group of Tesla (TSLA) shareholders suing the Tesla (TSLA) CEO who want a judge to muzzle him.)
There are also signs that other potential bidders for Twitter may be circling. Reuters reported last week that buyout firm Thoma Bravo had approached Twitter about potentially making its own acquisition bid to rival Musk’s. (Thoma Bravo previously declined to comment on the report.) Asset management and lending firm Apollo Global Management has also been contacted by several parties considering bids for Twitter about potentially assisting with financing a deal, a source familiar with the firm confirmed to CNN Business Monday, although it’s not clear whether those are parties to a Musk-connected offer or other bidders.