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    Home » World » Exactly how does Elon Musk plan to pay for Twitter?

    Exactly how does Elon Musk plan to pay for Twitter?

    Musk needs to secure an additional $22.4-billion of funds to cover the equity financing portion of his deal.
    By Agency Staff7 October 2022
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    Elon Musk. Dado Ruvic/Reuters

    Elon Musk bought himself some time on Thursday, after a judge accepted the billionaire’s request to halt a Twitter lawsuit to allow him to close his proposed US$44-billion buyout of the social media company by 28 October.

    Now comes the big question: how will he pay for it?

    Musk said earlier this week he would buy Twitter for $54.20/share, the price that was agreed in April, but included a condition that the closing of the deal be contingent on debt financing for the transaction coming through.

    Musk has pledged to provide $46.5-billion in equity and debt financing for the acquisition

    Musk has pledged to provide $46.5-billion in equity and debt financing for the acquisition, which covers the $44-billion price tag and closing costs. Banks, including Morgan Stanley and Bank of America, committed to provide $13-billion of debt financing to support the deal.

    Twitter on Thursday cited one of the banks as saying that Musk had not communicated to them that he intends to close the transaction. Musk said that banks were “working cooperatively to fund the close” on or around 28 October.

    Musk’s $33.5-billion equity commitment would include his 9.6% Twitter stake, which is worth $4-billion, and the $7.1-billion he secured from equity investors, including Oracle co-founder Larry Ellison and Saudi Prince Alwaleed bin Talal.

    That leaves Musk needing to secure an additional $22.4-billion of funds to cover the equity financing portion of the deal.

    Musk, 51, is the world’s richest person with a net worth of $219=billion according to Forbes, but a large portion of his fortune is tied to his stakes in Tesla and SpaceX.

    Tesla, SpaceX?

    Musk has about $20-billion of cash after selling down part of his Tesla stake through multiple transactions in November and December last year and April and August this year. This means he would need to raise an additional $2-billion to $3-billion, even if the other equity and debt commitments are honoured.

    He can either choose to sell down more of his stake in Tesla, or his stake in SpaceX. Other options include obtaining a loan from banks against the stocks or getting more investors to contribute equity.

    In August, Musk said he does not plan to sell down his stake in Tesla any further, but the latest U-turn from Musk has revived concerns over whether he will sell more of the electric-vehicle maker’s stock to fund the deal.

    Read: Musk deal: Twitter employees ‘just along for the ride’

    Musk owned 465 million Tesla shares worth $111-billion following its three-for-one stock split, according to Reuters’ calculations. He has already borrowed heavily against a big portion of his Tesla stake.

    Read: Musk’s Twitter deal is back on

    On 20 April, Oracle founder Ellison said he was interested in participating in the deal as one of the investors in Twitter.  Ellison is among a group of investors who have collectively promised to chip in $7.1-billion of financing for the deal. So far, no investors have publicly said they would back away from their commitments.  — Hyunjoo Jin and Chibuike Oguh, (c) 2022 Reuters

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