Elon Musk is said to be in looking to secure additional outside funding to reduce the cash element of his agreed acquisition of Twitter Inc (NYSE:TWTR).
The Reuters news agency reports that Musk, the world’s richest person, is in discussions with large investment firms and other high net-worth individuals to help with the funding as most of the Tesla Inc (NASDAQ:TSLA) boss’s wealth is tied up in shares.
The Tesla CEO sold US$8.5bn of Tesla stock last week after the Twitter board backed his US$44bn bid for the company, which included a US$21bn cash element from Musk’s own pocket.
The news agency said that the investors Musk has turned to would receive a fixed dividend through providing preferred equity financing for the acquisition and would also benefit from any appreciation in the value of the company – and presumably also suffer if the value of the company goes down.
Apollo Global Management (NYSE:APO) Inc and Ares Management Corp are said to be among the private equity firms that have been in talks about providing the financing.
Musk has also reportedly been talking to existing large stakeholders in Twitter to see whether they would be prepared to stay on as partial owners rather than cashing in their chips.
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.
— Peggy Hunter (@PeggyHu80741915) May 3, 2022
The Tesla boss told reporters in New York that he wanted to dramatically increase the number of Americans who use the social media network, saying, “right now, it’s sort of niche”.
According to Twitter’s most recent earnings release, it averages around 40mln users a day in the US, of which Twitter estimates that less than 5% are using false or spamming accounts. Musk has vowed to remove “spambots” from the platform.