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Elon Musk has secured $46.5 billion in funding to buy Twitter Inc and is considering a tender offer for its shares, a filing with U.S. regulators showed on Thursday.
A tender offer as explained by Investopedia is “when an investor proposes buying shares from every shareholder of a publicly traded company for a certain price at a certain time. The investor normally offers a higher price per share than the company’s stock price, providing shareholders a greater incentive to sell their shares.”
Musk himself has committed to put up $33.5 billion, which will include $21 billion of equity and $12.5 billion of margin loans, to finance the transaction.
Banks, including Morgan Stanley, have agreed to provide another $13 billion in debt secured against Twitter itself, according to the filing.
The tender offer is expected to be offered at $54.20 per share based on the funding provided in the filing.
Twitter was not immediately available for comment.
Musk‘s latest move comes after Twitter failed to respond to his offer and adopted of a “poison pill” to thwart the billionaire’s effort to buy the social media platform for $43 billion. The Twitter board of directors had saidthat they are currently still considering the offer, but this announcement will likely heighten those discussions.
The filing indicates that Musk is still open to dealing with the board, stating, “The Reporting Person is seeking to negotiate a definitive agreement for the acquisition of Twitter by the Reporting Person and is prepared to begin such negotiations immediately,” the filing says.
Musk, a self-described “free speech absolutist,” has said the social media company needs to be taken private to grow and become a platform for free speech.
The offer from Musk, who is the second-largest shareholder of Twitter, has drawn private equity interest in participating in a deal for Twitter, Reuters reported, citing people familiar with the matter.
Apollo Global Management Inc is considering ways it can provide financing to any deal and is open to working with Musk or any other bidder, while Thoma Bravo has informed Twitter that it is exploring the possibility of putting together a bid.
Musk, an active Twitter user with over 80 million followers on the platform, has made of number of announcements on the platform, including some that have landed him in hot water with U.S. regulators.
In 2018, Musk tweeted he had “funding secured” to take Tesla Inc private for $420 per share – a move that led to millions of dollars in fines and him being forced to step down as chairman of the electric car company to resolve claims from the U.S. securities regulator that he defrauded investors.
Copyright 2022 Thomson/Reuters (Additions and edits for FISM News by Michael Cardinal)