Twitter Inc (NYSE:TWTR) acquirer Elon Musk has succeeded in securing US$7.1bn in outside funding for his takeover of the social media giant.
A group of close to 20 co-investors have backed Elon Musk who, despite reportedly being the richest man in the world thanks to his holding in Tesla Inc (NASDAQ:TSLA) (the company he founded) has found it a strain to raise the cash element of the agreed Twitter asking price.
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 group of investors running to Musk’s aid include Larry Ellison, the founder of database software giant Oracle, plus a division of Qatar’s sovereign wealth fund.
???? Elon Musk gets $7 billion help for Twitter buyout.
New crew includes Larry Ellison, Qatar, Binance, Sequoia
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— Sridhar Natarajan (@sridinats) May 5, 2022
Saudi Arabia’s Prince Alwaleed bin Talal has agreed to roll his US$1.89bn stake into the deal rather than cashing in his chips.
“Musk has secured US$7.14 billion in funding for his Twitter bid from good friend/Tesla board member Larry Ellison, Sequoia Capital, Brookfield, Qatar Holding and others. Now Musk's margin loan is reduced to $6.25 billion from its original $12.5 billion,” reported Wedbush Securities.
“There are continuing talks with existing holders of Twitter, including Dorsey that could be involved. This speaks to our thesis that once Musk secured and won the Twitter bid he would seek financing from PE [private equity] and other players to reduce his burden on the US$44 billion. In this game of high stakes poker the Ellison and impressive list of backers will remove more of an overhang from Tesla shares as the Musk leverage of shares now becomes less onerous. This was a smart financial and strategic move by Musk that will be well received across the board and also shows the Twitter deal is now on a glide path to get done by the end of this year which should close the arb[itrafe] spread in the name,” it added.
Shares in Tesla were down 5.9% in early deals while Twitter stock was up 3.7%.