When Elon Musk offered to buy the entirety of Twitter last week, many were surprised the Tesla CEO could even afford to do so. Though he’s technically the world’s richest man, Musk speaks often about how he’s cash-poor, with the vast majority of his wealth tied up in stock options. How, then, we wondered, would Musk even be able to find $43 billion in liquid funds to take over the social network?
In a new SEC filing published today, Musk said he had financing commitments for a total of $46.5 billion, which would give him plenty of room to buy up every last crumb of Twitter stock. About $25.5 billion of those commitments are in debt financing and loans against Twitter stock, while the other $21 billion is in equity financing. Morgan Stanley, Bank of America, and Barclays are major signees to Musk’s financial plan.
Moreover, the filing reveals that Musk is thinking over the possibility of making a tender offer to Twitter’s shareholders, given that the company’s board hasn’t given him an official response. (Though its adoption of a “poison pill” plan does certainly lend some insight into its feelings on the matter.)
He wants it tender? — Musk’s first strategy was the most direct: Reach out to the Twitter board, offer to buy the company, and wait for a response. But it’s been a week now since he tried that approach, and Musk is not a patient person.
Now Musk is toying with the idea of going around the board by making what’s known as a “tender offer.” That would essentially set a specific time when Musk would buy shares directly from every shareholder at a price higher than the current stock. Notably, a tender offer wouldn’t require Twitter management to accept Musk’s bid.
Thinking about it — Twitter’s silence has made it difficult to really understand which way the company is leaning in this massive decision. Some notable shareholders — including Saudi Arabian investor Prince Alwaleed bin Talal — have been vocal in rejecting Musk’s bid, but most have not been so forthcoming.
In response to the new SEC filing, a Twitter spokesperson said:
“As previously announced and communicated to Mr. Musk directly, the Board is committed to conducting a careful, comprehensive, and deliberate review to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders.”
Musk hasn’t actually opted to make a tender offer yet, but including it in this filing is a notable escalation. A tender offer wouldn’t be able to work unless Twitter drops its poison pill plan — which would require an actual conversation to happen between Musk and the Twitter board.