Elon Musk secures $46.5bn to fund possible hostile bid for Twitter

theguardian.com:

Elon Musk has secured $46.5bn in financing to fund a possible hostile bid for Twitter and is putting up $21bn of his own money as part of the package.

Musk also confirmed that he will raise a further $12.5bn for the offer via a margin loan secured against his shares in Tesla, the electric carmaker that he runs as CEO. Morgan Stanley, the US investment bank, is leading a group of financial institutions providing $13bn in debt financing.

The funding commitments were outlined in a filing on Thursday with the US financial watchdog, the Securities and Exchange Commission. The document confirmed that the world’s richest man was “exploring whether to commence a tender offer” for the shares in Twitter he does not hold. Musk already owns 9.2% of the social media platform and announced a $54.20-per-share bid last week.

A tender offer is viewed as a “hostile” bid because it bypasses the company’s board, which in a conventional takeover situation would be expected to recommend an offer to shareholders. Instead, Twitter’s board has moved to block Musk from increasing his shareholding without its approval.

Last week, Twitter launched a so-called poison-pill defence against Musk’s bid, aimed at blocking the Tesla CEO from building a stake in the business bigger than 15%. The tactic, commonly used by company boards as a bulwark against unwanted approaches, will allow existing investors in Twitter to buy shares at a heavy discount if anyone attempts to buy more than 15% of Twitter without the board’s backing.

This would dilute the shareholding of an unwelcome bidder such as Musk and is a significant block to any non-board approved bid. However, shareholders who support Musk’s approach could force the board to drop the poison pill gambit.

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