Loans, Investments, and Stacks of His Own Money: How Musk Funded the Twitter Takeover
In seeking ways to pay for his takeover of Twitter, Elon Musk offered money from his own personal assets, investment funds and bank loans, among others.
Here are the details of the funding for the deal, which was finalized on Thursday.
At first, the Tesla chief had hoped to avoid contributing more than $15 billion of his personal money to the $44 billion deal.
Much of that, about $12.5 billion, was to come from loans secured by his shares in the electric car company, meaning he wouldn’t have had to sell those shares.
Ultimately, Musk ditched the loan idea and implemented more cash funding. The 51-year-old ended up selling about $15.5 billion worth of Tesla stock in two waves, in April and August.
In the end, the South African-born billionaire will personally shell out just over $27 billion in cash on the transaction.
And most importantly, Musk, who according to Forbes magazine is worth around $220 billion, already has a 9.6% market share on Twitter.
The total amount of the deal also includes $5.2 billion from investment groups and other major funds, including Larry Ellison, the co-founder of software company Oracle, who wrote a check for $1 billion. dollars as part of the arrangement.
Qatar Holding, which is controlled by Qatar’s sovereign wealth fund, the Qatar Investment Authority, also threw capital into the pot.
And Prince Alwaleed bin Talal of Saudi Arabia transferred to Musk the nearly 35 million shares he already owned.
In exchange for their investments, contributors will become shareholders of Twitter.
The rest of the money – about $13 billion – is secured by bank loans, including from Morgan Stanley, Bank of America, Japanese banks Mitsubishi UFJ Financial Group and Mizuho, Barclays and French banks Societe Generale and BNP. Paribas.
According to documents filed with the United States Securities and Exchange Commission, Morgan Stanley’s contribution alone is about $3.5 billion.
These loans are guaranteed by Twitter, and the company, not Musk himself, will bear the financial responsibility to repay them.
The California-based company has so far struggled to generate profits and worked with an operating loss in the first half of 2022, meaning the debt generated from the takeover could add even more pressure financial to the already fragile position of the social media platform.