Musk secures £36bn for Twitter takeover: Billionaire car boss lines up £20bn in debt alongside £16bn of his own cash
Elon Musk has secured a £36billion package to fund his attempted takeover of Twitter.
As he stepped up his battle to seize control of the social media giant, the 50-year-old billionaire lined up £20billion in debt alongside £16billion of his own money, according to a filing yesterday.
The arrangement came as record results at electric car maker Tesla – where he is chief executive and the largest shareholder – put him in line for a £19billion bonus.
Not his first Rodeo: Musk built Tesla into a £766bn company and he remains its chief exec and the largest shareholder
The boost to his already enormous fortune – which is estimated at around £200billion, making him the world’s richest man – is timely given his audacious bid to buy Twitter.
Musk stunned both Wall Street and Silicon Valley earlier this month when he revealed he has taken a 9 per cent stake in Twitter.
He then last week swooped on the social medial firm with a £33billion takeover offer.
Since then, he has begun to ramp up his efforts to take hold of the company amid opposition from the Twitter board.
Yesterday, Musk again took to Twitter, vowing to ‘defeat the spam bots or die trying!’ if his bid succeeded. The tycoon also said the platform would ‘authenticate all real humans’ if he managed to take control.
The paperwork filed with the Securities and Exchange Commission yesterday showed the debt portion of the £36billion package to buy Twitter includes a £10billion loan from a group of banks led by Morgan Stanley.
Some of Musk’s shares in Tesla have been used as collateral for the loans, which some fear could impact the business if any takeover goes awry.
The filing also showed Musk was considering making a tender offer for the company, which would see the tycoon bypass Twitter’s board and take his proposal directly to shareholders. However, the company has been manoeuvring to thwart the billionaire’s efforts.
It has created what is known as a ‘poison pill’ defence, which means that if Musk takes his stake in Twitter above 15 per cent, it will flood the market with new shares – offering them to existing holders at a heavy discount.
This method, devised by law firms in the 1980s to protect companies from corporate raiders, will prevent Musk from being able to buy a majority stake without the board’s approval.
His interest in Twitter has raised concerns about his focus on Tesla.
Those fears eased on Wednesday night, however, when the carmaker posted record results.
The company reported revenues of £14.3billion for the first three months of 2022. This was 81 per cent higher than a year earlier while profits rose 147 per cent to £4.2billion.
The figures were boosted by the delivery of a record 310,000 cars in the first quarter as the firm shrugged off challenges in its supply chain including Covid-19 outbreaks and computer chip shortages.
The figures put him in line for the next three tranches of a bumper share award agreed in 2018 if he managed to increase its market value to £499billion within ten years.
The bonus is structured to be paid out in 12 tranches, each of which allows Musk, 50, to buy 8.4million Tesla shares for $70 each, a massive discount to its current stock price of around $1040.
Musk has so far received eight of these tranches.
The latest three tranches have a combined value of £19billion at the current share price [ie $1040 –this needs updating if share price moves significantly].
After these only one more tranche will remain.The awards must all be signed off by the company’s board and Musk must hold the shares for at least five years before selling them.
The payout was dubbed the ‘world’s biggest bonus’ when it was first announced and at the time was considered hugely ambitious and a giant risk for the billionaire.
However, he managed to hit the milestone ahead of schedule in January 2020, and since then Tesla’s value has ballooned to over £766billion alongside a rise in its share price of more than 1000 per cent.