Elon Musk has lined up $46.5 billion in financing for a possible hostile
takeover of Twitter and is "exploring" a direct tender offer to
shareholders, according to a securities filing released Thursday.
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Musk's filing pointed to a $13 billion debt facility from a financing
consortium led by Morgan Stanley, a separate $12.5 billion margin loan from the
same bank, as well as $21 billion in equity commitments from Musk himself.
The Tesla chief is "exploring whether to commence a tender offer... but
has not determined whether to do so at this time," the filing said.
The world's richest man on April 14 launched an unsolicited bid to buy
Twitter for $54.20 a share, saying the influential microblogging platform had
fallen short of free-speech imperatives.
The following day, Twitter moved to defend itself against the $43 billion
takeover effort, announcing a "poison pill" plan that would make it
harder for the billionaire to get a controlling stake in the social media
company.
Despite Musk's great wealth, the question of financing had been seen as a
potential stumbling block because much of Musk's holdings are in Tesla shares
rather than cash.
Still, analysts expressed skepticism that the Tesla CEO's latest move would
appreciably change the picture, given the poison pill.
The defense established by Twitter kicks in if an investor buys more than 15
percent in shares without the directors' agreement. Musk holds nine percent.
The manuever makes it harder for a buyer to build too big of a stake without
board approval, by triggering an option that allows other investors to buy more
of a company's shares at a discount.
Dan Ives, an analyst at Wedbush, described Musk's latest manuever in a tweet
as an effort "to put more pressure on Twitter board."
"Poison poll gave the board time to try to find second bidder; now the
soap opera takes (the) next step if Musk goes down this path," Ives said.
CFRA Research Angelo Zino said Musk's effort still faces significant hurdles
in light of the Twitter board's opposition to his proposal and the poison pill
mechanism.
"Despite the filing, we don't believe it puts Musk any closer towards
reaching a deal," Zino said.
"We think Musk could look to increase his stake closer to 15 percent to
put additional pressure on Twitter, but we think he will ultimately need to
have constructive conversations with the board to be successful."
Musk's efforts have raised hopes about the commercial potential of Twitter,
which has struggled to achieve profitable growth despite its influential spot
in culture and politics.
But the polarizing Tesla CEO's campaign also has sparked concern among
technology and free-speech experts who point to Musk's unpredictable statements
and history of bullying critics, which contradict his stated aims.
Twitter shares were flat at $46.72 in afternoon trading.
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