Elon Musk confirmed through a new SEC filing that he secured $46 billion in financing to make a tender offer to Twitter, but he will likely need to negotiate with the social media’s board after they adopted a poison pill defense. This time, it is truly “funding secured.”
When trying to take Tesla private back in 2018, Musk got into trouble with the SEC for tweeting “funding secured,” when it was still only in the early stages. The CEO recently argued that funding was indeed secured without providing any evidence.
Now Musk is trying to take Twitter private, and it looks like he learned his lesson because he is doing things completely differently this time.
Today, Musk filed with the SEC a new document to confirm that he has secured $46 billion in financing for a tender offer he is considering:
Twitter has not responded to the Proposal. Given the lack of response by Twitter, the Reporting Person is exploring whether to commence a tender offer to acquire all of the outstanding shares of Common Stock (together with the associated rights issued pursuant to the Rights Agreement (the “Rights” and, together with the Common Stock, the “Shares”) that are issued and outstanding (and not held by the Reporting Person) at a price of $54.20 per share, net to the seller in cash, without interest and less any required withholding taxes, subject to certain conditions (the “Potential Offer”), but has not determined whether to do so at this time.
The filing includes commitment letters from banks totaling $26.5 billion and an equity commitment letter for $21 billion – totaling $46.5 billion in financing commitment. Morgan Stanley is the main back backing of the deal but others, including Bank of America and Barclays, are also participating. The documents confirmed that Musk is pledging Tesla shares as collateral for the deal.
While the funding is indeed now secured, Musk is likely going to have problems pushing it through in its current form since Twitter’s board adopted a “poison pill” defense that would dilute the company’s stock if Musk’s ownership exceeds 15%.
Tesla’s CEO would likely have to negotiate further with the board before moving forward with this tender offer, which might prove difficult.
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