Elon Musk adds Binance, Ellison, Prince Alwaleed, and other people to the $44 billion Twitter deal that he made.
Elon Musk has raised $7.1 billion in new funding, including from billionaire Larry Ellison, a Saudi prince, and Sequoia Capital, to help fund his proposed $44 billion takeover of Twitter.
The 19 equity commitments come as the Tesla entrepreneur gathers funds to fund one of the largest tech takeovers in history. Musk had previously stated that he intended to fund the transaction in part with a $12.5 billion loan secured against his Tesla Inc. stock.
With the extra money, Musk will be able to cut his margin loan in half to $6.25 billion, making the deal less risky for both Musk and his lenders. It also minimises the amount of money Musk has to put up personally.
Musk is anticipated to act as interim CEO of Twitter for a “few months” after the acquisition is completed, according to CNBC.
According to an amended security filing Thursday morning, Saudi Prince Alwaleed bin Talal, chairman of the board at Kingdom Holding Co., made the largest contribution, agreeing to commit nearly 35 million shares in Twitter — worth $1.9 billion — to keep a stake in the company after Musk’s takeover. Ellison, the co-founder of Oracle Corp. and a member of Tesla’s board of directors, pledged $1 billion through his trust.
Binance Holdings Ltd., the world’s largest crypto exchange, Brookfield Asset Management, Fidelity Management & Research, and Qatar Holding are among the other investors identified in the document.
Binance’s chief executive, Changpeng Zhao, tweeted that the $500 million pledge was “a little contribution to the cause.”
The market appears to be coming around to the concept that the acquisition will close as the funding picture becomes clearer. The difference between Twitter’s stock price and Musk’s offer of $54.20 per share has shrunk to its smallest since April 26. On Thursday, Twitter’s stock jumped 2.7 per cent to $50.36. The agreement is expected to be finalised later this year, with both parties agreeing to pay a $1 billion breakup fee if it falls through.
The world’s wealthiest person agreed to buy Twitter on April 25 using a financing arrangement that has some Tesla investors concerned. Musk promised to put up $21 billion in equity in addition to committing tens of billions of dollars in Tesla stock to fund margin loans. According to the filing on Thursday, that figure has climbed to $27.25 billion. To fund the acquisition, Musk has sold more than $8.5 billion in Tesla stock.
“In this high-stakes poker game, Ellison and his remarkable list of backers will remove more of the overhang from Tesla shares as Musk’s share leverage becomes less onerous,” said Dan Ives, a Wedbush analyst. “Musk made a wise financial and strategic decision that will be favourably accepted by all.”
Traditional asset managers, venture capital firms, boutique hedge funds, and one of the world’s largest pools of capital are among Musk’s latest backers. Qatar Holding, a subsidiary of Qatar’s sovereign wealth fund, has committed $375 million.
Musk’s offer was earlier rejected by Alwaleed, who stated that it did not come “near to the intrinsic value of Twitter.”
Musk is reportedly in talks with Twitter co-founder Jack Dorsey about contributing part of his company’s stock to the deal.
Apart from Musk, Ellison, 77, is the wealthiest member of the group. The corporate software mogul is worth $95.6 billion, ranking 11th on the Bloomberg Billionaires Index. He isn’t on Twitter and hasn’t tweeted in almost a decade, although he shares some of Musk’s political ideas. Ellison is a significant Republican donor who held a Trump event in 2020.
Several Tesla investors, notably Ellison, who holds 1.45 per cent of the company’s outstanding shares, and Fidelity Management & Research Co., which owns approximately 1%, have pledged their support for Musk’s Twitter bid. Both are major shareholders in Tesla.
He has stated that his primary goal for purchasing Twitter is to turn it into a safe haven for free speech, which he believes is “vital to a functioning democracy.”
He has proposed that Twitter limit advertising, open-source its algorithm, and focus more on free-speech principles, among other things.