The owner of Tesla and SpaceX became the social media company’s largest shareholder earlier this month. Soon after he bought 9.1 percent of the company’s shares, Musk made an offer to Twitter’s board of directors. He offered to buy the 90.9 percent of the company he does not own for $54.20 per share — a buyout bid of approximately $43 billion.
He explained the $54.20 was “a 54 percent premium over the day before I began investing in Twitter and a 38 percent premium over the day before my investment was publicly announced.”
“The Twitter Board of Directors will carefully review the proposal to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders,” a company spokesperson reportedly said in a statement.
The day after saying they would carefully review the billionaire’s unsolicited buyout offer, Twitter’s board of directors announced it had approved a rights agreement that could make buying it too expensive. That act is often called a “poison pill” because it can poison a deal by geometrically inflating the cost of a buyout. If holders of the other 90.1 percent of the company exercised their dividend right, Musk may be looking at paying almost $110 billion to buy Twitter vs. $54.3 billion before the “poison pill.”
Twitter has not responded to Musk’s proposal, according to an updated filing he submitted Wednesday to the Securities and Exchange Commission.
The billionaire said Twitter’s lack of response has made him consider a tender offer to acquire all the shares of common stock he does not already own at $54.20 cash per share.
His updated filing with federal stock regulators indicates he has commitments of around $46.5 billion lined up to pay for the other shares. He noted Morgan Stanley Senior Funding with some partners committed to provide $13 billion in funding and $12.5 billion in margin loans. He further noted he has provided a debt commitment letter, dated Wednesday, to pay any remaining balance. The difference between the purchase price and the banks’ commitments, which Musk would be on the hook for, is estimated to run around $21 billion.
Musk cautions in his SEC filing that he is not obligated to buy the shares but is keeping all his options open by announcing he has obtained the financing to buy Twitter if he wants.
The caution legalese in the billionaire’s SEC filing is at odds with a Saturday tweet he posted with the caption “Love Me Tender.”
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