To fund the Twitter acquisition, Elon Musk raised $7.1 billion from financier friends. Investors from less democratic countries such as Saudi Arabia and Qatar will also support the so-called ‘platform for free speech’.
–
After selling $8.5 billion in Tesla shares and an agreement with banks for large loans, Elon Musk appeared to have a $6 to 9 billion gap last week in the financing of his bid on Twitter. (DS 30 april)† This week he told stock watchdog SEC that he already has commitments from 19 major shareholders that would invest in the capital of Twitter for $7.1 billion – or stay put.
Ellison en co.
The most famous investor is Larry Ellison, founder and former CEO of the software company Oracle. He takes a $1 billion stake. The venture capital firm Sequoia Capital ($800 million), crypto platform Binance and management company Brookfield are also participating in the takeover bid, which will cost $44 billion.
Musk also receives support from Tesla shareholders from the very beginning, when the company did not yet sell cars. Tesla’s massive growth has made their invested millions worth billions — Ellison owns 1.5 percent of Tesla, currently worth $10 billion. Ron Baron of Baron Capital Management puts $100 million into Twitter. His stake is now worth $7 billion. Ben Horowitz of venture capital firm Andreessen Horowitz said they are co-investing in Twitter because they believe in Musk’s genius.
Support from the Middle East
Stranger is that investors from Qatar and Saudi Arabia are also joining the deal. Musk wants to make Twitter even more free, so to speak, to fully guarantee ‘freedom of expression’. However, that right does not apply, or only partially, in Saudi Arabia and Qatar. Vy Capital from Dubai is also contributing 700 million dollars. Saudi prince Alwaleed bin Talal will keep his current share of nearly 1.9 billion in Twitter if Musk takes the company off the stock exchange. He initially opposed the takeover of Twitter because he thought Musk’s offer was too low.
Who is not participating?
Those who are not in the party are real private equity-funds. These are funds that take participations in unlisted companies. According to the business newspaper Financial Times they think the deal is too link for the time being. Musk gives few details about what he plans to do with Twitter and they fear that they will have little control over Twitter once Musk takes control. It also seems that Musk, who is already CEO of Tesla and SpaceX, would also become the CEO of Twitter in a first phase. Where he will find the time to run all those companies is a great mystery. It’s also not yet clear whether Jack Dorsey, former Twitter CEO, will sell his stake or stay on Twitter.
Still 8 billion dollars to go.
Is the financing now complete? In theory yes, but Musk has changed his plans. He initially planned to finance the acquisition with more than half of debt. He’s going to roll that back now. He would borrow only 6.25 billion and not 12.5 billion for the bid with Tesla shares as collateral. This significantly reduces his personal financial risk. He would fill in the gap with other investors, who would cough up the remaining $8 billion needed to close the deal.
–
