Tesla CEO Elon Musk has secured a financing commitment of $46.5 billion to acquire Twitter even as the company's board is yet to respond to the takeover proposal made by the world's richest person.
Given the lack of response by Twitter, Musk is now exploring whether to commence a tender offer to acquire all of the outstanding shares of common stock that are issued and outstanding at a price of $54.20 per share, according to a filing with US Securities and Exchange Commission (SEC).
The Tesla chief executive has committed to provide $33.5 billion of his own money to finance the deal. This includes $21 billion of equity and $12.5 billion of margin loans. Morgan Stanley and some other financial institutions have committed to provide $13 billion in debt financing to Musk and other related entities.
This comes days after Twitter's board adopted a "poison pill" – a shareholder rights plan – to protect itself from Musk's takeover bid. The move gives existing shareholders an option to buy more stock at a lower price.
Musk, who is the largest individual shareholder of Twitter with a 9.1% stake, had earlier attacked the company’s board, saying they hardly own any shares. "Wow, with Jack departing, the Twitter board collectively owns almost no shares! Objectively, their economic interests are simply not aligned with shareholders," he had said. Musk had said the salary of Twitter’s board will be $0 if his offer to buy 100% of the company succeeds.
In a letter to Bret Taylor, chairman of the board at Twitter, Musk had last week offered to buy 100% of Twitter for $43 billion or $54.20 per share in cash, a 38% premium over the day before Musk's investment was publicly announced.
"My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder," the Tesla founder had said.
The company should be private to go through the changes that need to be made, Musk wrote in the letter. "After the past several days of thinking this over, I have decided I want to acquire the company and take it private."
While Musk has been critical of censorship by Twitter, he believes in the company’s potential to be the platform for free speech around the globe.
"I believe free speech is a societal imperative for a functioning democracy. However, since making my investment I now realise the company will neither thrive nor serve this societal imperative in its current form," the world's richest person wrote in his letter.
Musk also cautioned that if the deal doesn't go through, he would need to reconsider his position as a shareholder. "If the deal doesn't work, given that I don't have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder. This is not a threat, it's simply not a good investment without the changes that need to be made. And those changes won't happen without taking the company private," he said.
