Musk Reportedly Seeks More Financing For Twitter Acquisition

Topline

According to Reuters, Elon Musk wants additional equity financing for the planned purchase of Twitter worth $44 Billion, Reuters reported Monday. It could help the billionaire reduce the debt he has and allow him to borrow less.

Elon Musk, Tesla CEO, addresses the crowd at the opening of “Cyber Rodeo” in Austin Texas, April 7, 2012. … [+] 2022.

SUZANNE CORDEIRO/AFP via Getty Images

Here are some key facts

Musk is said to have spoken with private equity companies, hedge funds, and wealthy individuals regarding the possibility of getting equity financing.

Musk offers to buy Twitter via $21 Billion equity financing. This includes a $12.5B margin loan against a part of Tesla’s 21% ownership and $13B in secured loans for Twitter assets.

Reuters reports that some banks offered support for the purchase with loans secured against Twitter but have resisted providing additional financing. They said that they did not believe that Twitter generated enough cash flow to warrant more loans.

Reuters reports that Musk still is considering whether equity partners will be enlisted to pay $21 billion to finance the acquisition of Twitter.

Tangent

Musk has also contacted major Twitter shareholders—including founder Jack Dorsey and Fidelity—about the prospect of holding onto their stakes in the company’s new structure, Reuters reported. Musk previously stated that he would like to keep as many of the existing Twitter shareholders after the acquisition.

The Key Background

Musk disclosed April 4 he had acquired a 9.2% stake in Twitter, and later made his “best and final offer” to purchase the entire company for $54.20 per share The board first adopted a “poison pill” defense to deter a hostile takeover, but several days after Musk announced he had secured $46.5 billion in financing, the board accepted his offer. Despite setting a lofty goal of doubling revenue from 2021 to 2023, Twitter’s growth has lagged expectations. In the first quarter of 2022, Twitter’s revenue grew by 16% year-over-year to $1.2 billion. The company’s net income grew 655% year-over-year to $513 million, though this growth was due mostly to a gain of $970 million from the sale of the mobile ad network MoPub, and the company reported an operating loss of $128 million in the first quarter. Musk said he intends to boost Twitter’s profitability by offering new opportunities to monetize tweets and that he intends to cut costs by reducing Twitter board member salaries from roughly $290,000 to $0.

Big Number

$253.6 billion. That’s how much Musk is worth, making him the world’s richest person, according to SME’ estimates. The majority of his fortune comes from Tesla and SpaceX.