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According to reports Tuesday, Tesla CEO Elon Musk is willing to invest up to $15 billion of his own money to make Twitter private and will make an offer within 10 days.
The New York Post reported Tuesday that Musk tapped a 9.1% stake in social media company Morgan Stanley to raise another $10 billion.
Tesla Motors CEO Elon Musk speaks at the Tesla Giga Texas Manufacturing “Cyber Rodeo” grand opening party on April 7, 2022 in Austin, Texas. (SUZANNE CORDEIRO/AFP via Getty Images/Getty Images)
Musk’s massive $43 billion bid to buy the company — or $54.20 per share — could require borrowing for both the company and its shares, in addition to raising funds from private equity firms. Investors, The Post reported, citing two sources close to the situation.
The estimated $10 billion to $15 billion Musk is reportedly willing to invest far exceeds his roughly $3.4 billion stake in the company.
The sources told The Post that the co-investors will collectively have more equity in Twitter, but Musk will remain the largest single shareholder.
ELON MUSK TWEET HIS SOCIAL MEDIA POLICY PHILOSOPHY IN A TWITTER BID
The co-investors will reportedly fund a hostile bid directly to Twitter shareholders, which happens when an outside investor’s ambitions to acquire another company don’t have management approval or blessing.
According to The Post, Musk will launch the Tender Officer within about 10 days. It remains to be seen how successful Musk will be in raising the necessary cash, as his propensity for controversy has turned some investors off.
In this photo illustration the Twitter logo is seen displayed on a smartphone. (Photo Illustration by Thomas Trutschel/Photothek via Getty Images / Getty Images)
Last week, Twitter introduced a measure known as the “poison pill,” which refers to a tactic companies use to prevent an investor from acquiring a controlling interest in a company.
If a shareholder accrues a 15% stake in the company through a purchase not approved by the board, other shareholders are granted the right to purchase additional shares at a discount, diluting the recently acquired approximately 9.1% stake.
For Musk’s offer to be successful, he would need the full approval of a majority of Twitter shareholders.
DESANTIS WOULD LIKE TO HOLD THE TWITTERBOARD “RESPONSIBILITY” FOR RESPONDING TO MUSK’S OFFER TO PURCHASE
FOX Business reached out to Musk for comment but received no response prior to publication. Twitter declined to comment.
Twitter leaves open the possibility of negotiating with Musk or another suitor. In a regulatory filing Monday, Twitter’s board of directors says the shareholder rights agreement should not affect any merger or board-approved bid.
Elon Musk gestures as he speaks during a news conference at SpaceX’s Starbase near the village of Boca Chica in South Texas on February 10, 2022. (Photo by JIM WATSON/AFP via Getty Images/Getty Images)
Musk didn’t provide details on the financing when releasing his offer, but such disclosure could improve his chances. He could raise money by borrowing billions using his shares in Tesla and SpaceX as collateral, and he could bring in other investors.
The poison pill would give stockholders the right, starting April 25, to buy one-thousandth of a preferred share for every common share they own at a price of $210. The rights are triggered when an individual or group of investors buys 15% or more of the company’s stock without board approval.
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According to the filing, which doesn’t specifically mention Musk, the preferred stock would have the same voting rights as a common stock.
The Associated Press contributed to this report.