Elon Musk reportedly in talks with large investment firms and wealthy individuals to help fund the cash portion of massive $44bn Twitter buyout
The Tesla and SpaceX chief executive has committed some $21bn in cash to fund the deal, and taking on additional partners could reduce that contribution.
Musk’s wealth, estimated at $245bn by Forbes, is largely tied up in Tesla shares and last week he disclosed he had sold $8.5bn of them to fund the Twitter deal.
He has also secured a $12.5bn margin loan secured against his Tesla shares to help fund the deal, and taking on additional capital could reduce that loan.
Private equity firms, hedge funds and wealthy individuals are in talks with Musk about participating in the deal, Reuters said, citing unnamed people familiar with the matter.
The additional funding could come in the form of preferred equity financing, the people said, which would pay a fixed dividend from Twitter while appreciating in line with the equity value of the company.
Apollo Global Management and Ares Management are reportedly two of the private equity firms involved in talks.
Musk hasn’t made a final decision on whether to take on partners, but isn’t currently seeking to take on more debt for the deal, according to the report.
He has also reportedly been in talks with major Twitter shareholders, such as Twitter’s former chief executive and current board member Jack Dorsey, and large institutional investors such as Fidelity, about rolling their stakes into the deal rather than cashing out.
Tesla shares up on Reuters article saying Musk seeking partners for financing on Twitter deal. This is big if it materializes as we believe the Twitter deal has been a $100+ per share overhang on Tesla’s stock due to the Musk financing concerns/shares tied up.
— Dan Ives (@DivesTech) May 2, 2022
Musk has said publicly that he wants to keep as many investors in Twitter as possible as he takes the company private.
Following the report Tesla’s shares ended trading on Monday in New York up 3.7 percent at $902.94.
Some industry observers said questions about how Musk plans to fund his portion of the massive buyout have been weighing on Tesla’s share price.
“This is big if it materialises as we believe the Twitter deal has been a $100+ per share overhang on Tesla’s stock due to the Musk financing concerns/shares tied up,” wrote Wedbush analyst Dan Ives on Twitter.
There are questions about whether Musk will complete the deal at all, given his erratic past record.
In 2018, for instance, he announced on Twitter that he had “funding secured” to take Tesla private, but never proceeded with a deal.
‘Most of America’
Attending the annual Met Gala in New York on Monday, Musk said he wanted to expand Twitter from its current “niche” role until “most of America” was using it.
“Right now it’s sort of niche. I want a much bigger percentage of the country to be on it, engaging in dialogue,” he said.
He added that he wanted it to be “as broadly inclusive as possible, where ideally most of America is on it and talking” and as trusted as possible.