Elon Musk to Drop Plans to Partially Fund the Twitter Acquisition

Share Us

440
Elon Musk to Drop Plans to Partially Fund the Twitter Acquisition
26 May 2022
6 min read

News Synopsis

Elon Musk has discontinued plans to partially fund the purchase of Twitter Inc. with a margin loan related to Tesla Inc's stock, raising the stock component of the transaction to $33.5 billion.

According to a regulatory filing filed on Wednesday, Musk will provide an additional $6.25 billion in equity financing for the $44 billion acquisition. This is enough to eliminate the same amount of margin lending that had already been reduced earlier this month.

The new structure can reduce the risk of trading for both Musk and his lenders, especially given the recent decline in Tesla's stock price. Electric car-makers have fallen about 40% since Musk first announced his stake in Twitter Inc in early April. The long-term slump has raised the prospect that he does not have enough unsecured stock to cover the margin loan.

According to a recent filing, Musk is seeking additional funding to invest in private companies, including discussions with Twitter co-founder Jack Dorsey and other investors.

Bloomberg reported earlier this month that Musk has received an additional $1 billion in equity commitments since its first round, and his advisors are seeking interest on preferred stock loans of up to $6 billion from potential investors. Twitter closed Wednesday at $37.16, properly underneath Musk's presenting fee of $54.20. The stocks had been up 6.8% in after-hours in New York, even as Tesla slid 1.4%.

TWN In-Focus