Where does he get money for Twitter?

(Bloomberg) – Elon Musk and Twitter Inc. reached agreement that the world’s richest man buys the $ 44 billion social networking platform, resolving the pressing question of whether the company’s board of directors would give its consent to the leveraged buyout agreement.

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On Musk’s side, however, there is still a mystery: How will he cover the $ 21 billion stake in the transaction that he is personally guaranteed?

Musk, 50, has outlined the $ 13 billion in bank financing secured by the social media company and the $ 12.5 billion backed by a pledge of some of his $ 170 billion Tesla Inc. stake. But he has been missing details on how he will fund the rest.

There is little doubt that he can come up with the money. Musk is the world’s richest person with a fortune of $ 257 billion, according to the Bloomberg Billionaires Index. However, he has only about $ 3 billion in cash and some liquid assets, according to Bloomberg’s estimates.

It leaves him with the following options:

Other investors

One way for Musk is to find like-minded investors buying into his vision for Twitter to join him in his purchases. This would mean that part of the shareholding comes from new or existing shareholders.

He has already suggested that such a strategy may be in the cards. Following his initial offer to buy Twitter, Musk said at a TED event that “the intention is to retain as many shareholders as the law allows.”

Private U.S. companies are generally limited to fewer than 2,000 shareholders, meaning most retail investors will not continue to own Twitter if the acquisition closes.

But major shareholders, such as Twitter founder Jack Dorsey, may choose to keep their shares in the company if they believe in Musk’s vision. Dorsey’s stake is worth nearly $ 1 billion. Bloomberg News reported Monday that Musk is lining up with stock partners and continuing talks with other potential co-investors.

On the other hand, Musk’s statement at the TED event that he “does not care about the economy” could scare some potential investors away.

Selling bets

Although Musk cannot bring together many other stock investors, he has the financial firepower to handle it most alone, thanks to the crown jewel of his enormous fortune: his stake in Tesla.

After pledging shares to cover its $ 12.5 billion margin loan, Musk will still own unsecured shares in the car company worth about $ 21.6 billion, based on Tesla’s closing price on Monday. After tax, that sale would be close to covering his full commitment, though much will depend on the price he gets for the stock.

This strategy comes with its own set of risks. First, concerns that Musk will have to sell some of its shares may already weigh on the electric carmaker’s share price. It has fallen about 8% since the beginning of the month.

Selling its shares in its private companies, SpaceX and The Boring Company, is possible but unlikely because they are so much less liquid.

Cash, Crypto

The second option: Musk is even richer than calculated by the Bloomberg Billionaires Index.

Musk’s liquidity estimate is based on listings related to listed stocks and news items, but much of the information about his private finances is limited. If, for example, his portfolio of investments has outperformed the market, Musk may be richer than Bloomberg’s estimates, and he may not need new sources of funding to cover the $ 21 billion.

Musk said in July that he owned Bitcoin, Ether and Dogecoin. Although it is not clear how much he owns or how long he has owned them, the first two cryptocurrencies have gained around 720% and 2,600% respectively since March 2020, a much steeper increase than the around 90% increase in the S&P 500 index . Dogecoin, meanwhile, rose nearly 30% on Monday after Musk agreed to buy Twitter.

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