Tesla founder Elon Musk has secured $7.14 billion (about 6,750 million euros) from 19 investors, including Oracle co-founder Larry Ellison, to finance its $44 billion acquisition of the social network Twitter, it has revealed to the United States Securities and Exchange Commission (SEC).
The information submitted shows that the billionaire businessman has received letters of commitment from investors such as Sequoia Capital, Brookfield, Qatar Holding, Vy Capital and Binance, the Chinese cryptocurrency company, which reduces the pressure on Musk’s personal fortune in this operation. With these new co-investors, Musk will be able to use less debt, which in turn depends on a high price for Tesla shares, according to Forbes.
The contribution of these investors will make it possible to restructure the composition of the payment, reducing the 12.5 billion dollars of the initial loan (guaranteed by Tesla shares) to only 6.25 billion dollars. Likewise, the financing provided by the investors themselves (the vast majority by Musk) is increased to 27,250 million dollars (from the 21,000 million dollars initially planned).
Ellison, a member of the Tesla board of directors and a major shareholder in Oracle, has committed $1 billion. It is followed by Sequoia (800 million), the Dubai technology fund Vy Capital (700 million) and Binance (500 million).
Among the investors who have given their commitment is the Saudi prince Alwaleed bin Talal, which participates in Twitter through its Kingdom Holding conglomerate. Although he had initially opposed the operation by assuring that he did not believe that “Elon Musk’s offer is close to the intrinsic value of Twitter given the growth projections”, he will finally contribute his 35 million shares of the social network to the investment vehicle that he will buy the company, a stake valued at about 1,900 million at the price of the offer. Alwaleed has changed his speech and today he has indicated through Twitter: “Glad to connect with you, my ‘new’ friend @elonmusk. I think you will be an excellent leader for @Twitter to promote and maximize its great potential”.
Musk will continue to hold talks with current Twitter shareholders, including the social network’s co-founder and former CEO Jack Dorsey, who remains a board member, to get them involved in his offer. Dorsey, who has a roughly 2.3% stake in Twitter, has stated his support for Musk’s purchase of the social network. The objective is that he also contributes with his actions to the purchase.
Other companies and individuals who have decided to back Musk’s offer include Fidelity ($316 million), Draper Fisher Jurvetson, BAMCO, Honeycomb Asset Management, and Aliya Capital, the latter with 360 million.
On April 26, Twitter accepted the offer that the American tycoon launched on the social network. Musk is offering $54.2 per share. The acquisition is expected to close this year after a green light from shareholders, regulators and other customary conditions.
Twitter shares rise slightly, to almost $50, still far from the price proposed by the founder of Tesla, which seems to show that the new capital commitments give investors peace of mind, although there are still doubts about the outcome of the operation. Musk would have to pay $1 billion if he abandons the transaction.
Two days ago, The Wall Street Journal reported, citing sources familiar with the matter, that Musk plans to sell Twitter in three years. Today CNBC tells, also citing sources familiar with the operation, that Musk will be CEO of the social network for a few months after the acquisition is complete.
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Elon Musk raises 6.75 billion from investors, including Larry Ellison, to buy Twitter