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If you were ever in doubt as to whether Elon Musk would actually go through with his Twitter takeover gambit, perish that thought, as the funding for this grossly bloated deal is now firmly in place.
A few days back, the Delaware Court of Chancery had stayed the trial between Elon Musk and Twitter until 05:00 p.m. on the 28th of October in order to allow both parties to close the takeover agreement after the CEO of Tesla expressed willingness to adhere to the original terms of the deal, eschewing objections over the quantum of bots that proliferate the social media platform or the security concerns raised by a high-profile whistleblower.
BREAKING: Banks have started to send $13 billion in cash backing Elon Musk's takeover of Twitter. https://t.co/isCqSUxxei
— Sawyer Merritt (@SawyerMerritt) October 26, 2022
Accordingly, Elon Musk recently informed the other equity investors in the Twitter takeover deal, as well as the banks that are slated to provide $13 billion in debt financing, that he intends to close the takeover agreement with Twitter by this Friday. For their part, the banks have already started to turn over $13 billion in cash.
As a refresher, Twitter’s outstanding shares amount to 765.246 million (excluding 63 million in RSUs). Of these, Elon Musk already owns 73.115 million shares that are worth $3.963 billion at the proposed offer price of $54.20 per share. This means that the CEO of Tesla needs $37.5 billion in total to purchase the residual outstanding Twitter shares. Of course, the debt portion of the proposed financing structure currently computes at around $13 billion. This leaves the equity financing portion at $24.51 billion.
In April-May, Elon Musk sold around $8.5 billion worth of Tesla shares to fund his equity commitments under the original Twitter takeover deal. Then, back in August, the CEO of Tesla sold $6.9 billion worth of Tesla shares. This meant that the CEO of Tesla had already accumulated $15.4 billion of his own funds for the Twitter deal before October.
In addition, Elon Musk has also secured $7.1 billion in equity commitments from the likes of Larry Ellison, Binance, Sequoia, the Saudi Prince Al Waleed, etc.
So, with $15.4 billion in hand and $7.1 billion worth of equity commitments, Elon Musk already has $22.5 billion worth of equity financing. However, as stated above, the CEO of Tesla needed $24.51 billion in equity financing to consummate the Twitter takeover deal, leaving a $2 billion funding hole. Additionally, when we account for Twitter’s 63 million RSUs, the actual funding shortfall increased to $5.4 billion.
Agree with @SawyerMerritt that Elon has until 10pm ET to file Form 4 for Monday’s sales. Section 16 officers, board members, and owners of more than 10% of stock have until 10pm to file their Form 4s. $tsla $twtr pic.twitter.com/JpIR0m28Fe
— Gary Black (@garyblack00) October 26, 2022
Amid Monday’s bloodbath in the EV giant’s stock, speculation was rife that Musk was selling shares. If that was indeed the case, the CEO of Tesla was required to disclose his sales by 10:00 p.m. ET on Wednesday. However, the requisite filings have not materialized, indicating that Musk did not sell any additional Tesla shares in October.
The only other likely outcome is that Elon Musk was able to procure additional equity commitments for the Twitter takeover deal from some of the other partners.
Entering Twitter HQ – let that sink in! pic.twitter.com/D68z4K2wq7
— Elon Musk (@elonmusk) October 26, 2022
Meanwhile, Elon Musk entered Twitter HQ on Wednesday while carrying a literal sink. He is slated to address the social media platform’s employees on Friday. Moreover, the New York Stock Exchange has now communicated that Twitter shares will be delisted on Friday following the formal closure of the takeover deal.