Twitter shares fell 1.7 per cent Thursday in New York, closing at $US45.08. Musk offered $US54.20 per share in cash. Tesla shares declined 3.7 per cent.
“I have moved straight to the end. It’s a high price and your shareholders will love it.
Elon Musk, Tesla founder
Musk had 52 per cent of his Tesla shares pledged as of June 30, according to the company’s most recent proxy filing. The maximum that can be borrowed against pledged shares is 25 per cent of their value, according to a Tesla policy.
Since then, Musk has increased his share count by exercising options. His 172.6 million shares are worth $US170 billion ($US229.1), meaning he could theoretically borrow $US42.5 billion ($57.2 billion) by pledging all of them.
Musk said in December 2019 that he had also pledged some of his SpaceX shares. His 47 per cent stake in the company is worth about $US47.5 billion ($64 billion) , based on its October 2021 funding round. If there’s a similar maximum loan-to-value ratio, he could raise another $US12 billion ($16.1 billion) by fully pledging his SpaceX position — although banks tend to be much more cautious funding a privately held position, given the lack of liquidity.
Also, Musk has Tesla options worth $US54.1 billion ($72.9 billion) that he might be able to borrow against.
‘Technically Afford’
Musk said at a TED event in Vancouver on Thursday that he may seek to keep as many as 2,000 existing Twitter investors, reducing the cash he’d need to take it private.
“The intent is to retain as many shareholders as is allowed by the law,” he said, adding that he “could technically afford” the full purchase price.
Saudi billionaire Prince Alwaleed bin Talal, says Elon Musk’s offer wasn’t “close” to the platform’s true value.Credit:MAJDI MOHAMMED
After Saudi Arabia’s Prince Alwaleed bin Talal tweeted that the offer wasn’t “close to the intrinsic value” of Twitter, Musk asked how many shares the billionaire held in Twitter and for the Kingdom’s view on freedom of speech for journalists.
Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley were three of the banks that provided Musk personal loans, according to a 2020 Tesla filing. He has hired Morgan Stanley to advise on the Twitter bid, and his family office, Excession, is run by longtime adviser Jared Birchall, a former Morgan Stanley banker.
No matter how he goes about it, buying all of Twitter would be a stark shakeup of Musk’s empire. His purchase of a 9.1 per cent stake, first disclosed last week, marked his first significant diversification outside of Tesla and SpaceX.
“I am not playing the back-and-forth game,” Musk said in Thursday’s filing. “I have moved straight to the end. It’s a high price and your shareholders will love it. If the deal doesn’t work, given that I don’t have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder.”
Musk has played up his devotion to both Tesla and SpaceX, frequently tweeting about their achievements and claiming to sleep on the floor of a Tesla factory to set an example to his employees. Meanwhile, since disclosing his stake in Twitter, he has appealed to fellow users about potential moves and in one case suggested the website might be dying, given the lack of tweets from some celebrities.
In recent years, Musk has indicated he’s streamlining at least some aspects of his financial affairs. He’s sold multiple mansions in California after vowing to “own no home,” in 2020. He currently lives in Texas, where he relocated the headquarters of Tesla last year.
Bloomberg L.P.
What Elon Musk needs to do to buy Twitter
Source: Philippines Alive
