Elon Musk’s vision for Twitter and his financial plans for the social media giant proved instrumental in raising $46.5 billion USD in financing for his bid to acquire the company — reports Bloomberg.
Musk hasn’t said much publicly about his plans for Twitter beyond wanting to make it “the platform for free speech around the globe.” In fact, the Tesla and SpaceX CEO even said he doesn’t care about the economics of owning Twitter when he spoke at the 2022 TED Talk in Vancouver, B.C., Canada last week.
Early reports of Musk looking for co-investors in his planned acquisition of Twitter noted that potential partners seemed skittish due to Musk’s penchant for controversy and doubts as to whether Twitter is even worth the $54.20 a share the celebrity billionaire has offered to buy it for.
In the end, though, it was Musk’s vision for Twitter that was able to convince 12 banks to pony up billions of dollars in financing and back his play for the social media giant — they didn’t really have much else to go on, given that Musk is orchestrating an unsolicited offer issued directly to Twitter’s shareholders and therefore doesn’t have access to the company’s books.
According to sources familiar with the matter, Musk shared a carefully crafted plan with potential co-investors to load Twitter up with more debt without trashing its credit rating.
Musk’s advisers shared a slide presentation with potential lenders outlining the billionaire’s ideas for how Twitter’s business could be run, as well as its financial profile and how to boost revenue, the sources said.
Musk even appeared on Zoom calls with some of the top lenders his campaign was in talks with, where some of the people said he appeared engaged and enthusiastic about the deal.
The financing deal was hammered out over the Easter and Passover break and into this week, with most of the lenders signing commitment letters on Wednesday.
Musk’s efforts netted him around $13 billion in debt financing and a $12.5 billion margin loan commitment from Morgan Stanley and 11 other banks, secured in part by his holdings in Tesla. The electric vehicle (EV) pioneer has pledged an additional $21 billion through equity financing. Twitter has yet to respond to his offer.
It’s highly unusual for an agreement that includes both debt and a margin loan to be put together so quickly, some of the people said. Typically, margin loans take about a week to come together. Not when you’re the wealthiest man in the world, it would appear.
According to sources, banks felt confident about backing the deal not only because of Musk’s vision but also because the Tesla CEO was willing to commit a significantly large amount of equity. The equity portion is currently more than 40% of the purchase price, but it could end up being significantly higher.
Earlier in the week, Musk created three new holding companies, each with a variation of the name “X Holdings,” to help facilitate the Twitter acquisition.
