Elon Musk is never too far away from the headlines, it seems. The Tesla Inc (NASDAQ: TSLA) CEO has recently been at the centre of tech investors' attention over his guns blazing bid for total ownership of the social media giant Twitter Inc (NYSE: TWTR).
Musk first indicated he was interested in playing a larger role at Twitter when he bought a large parcel of the company's shares earlier this month, taking his Twitter stake to 9.2%.
He subsequently declined a board seat and made an offer of US$54.2 per share in cash to acquire the entire company and take it private. In response, Twitter's board has implemented what is known as a 'poison pill' strategy, which is a US mechanism that can help prevent a hostile takeover of a company by diluting the owner's shareholder base.
But now, another twist has emerged in this dramatic tale. According to reporting in the Australian Financial Review (AFR) this morning, Musk has revealed that he has secured the US$46.5 billion in funding he intends to buy Twitter with.
In a listing with the US Securities and Exchange Commission (SEC), Musk reportedly listed three sources of this funding. The first two are investment loans from US banks, collectively worth US$25.5 billion. The remaining US$21 billion will be funded by Musk himself, presumably from the sale of Tesla and perhaps SpaceX stock. SpaceX is another private company that Musk helms as CEO and from which he derives a significant chunk of his net wealth.
Musk has also reportedly been hinting that he will pursue a 'tender offer'. This involves making a purchase offer available to all Twitter investors at a set price. If enough investors accept and sell their shares to Musk, he wouldn't need board approval for a takeover.
Is Elon Musk about to buy Twitter?
So is Elon Musk buying Twitter? Well, that's basically all we know for now. But Musk's actions certainly show he is at the very least seriously considering a full buyout of Twitter. Musk has taken to the platform in recent weeks to express his concerns over the platform and suggest improvements. Here's one such Tweet:
Of course, Musk will need a veritable army of Twitter shareholders behind him if he is to succeed in taking Twitter private, an army happy to accept a buyout price of US$54.2 a share no less. Since Twitter has traded as high as US$73 in just the past year alone, that could be a hard task.
Musk has had doubters before, and he has a knack for proving them wrong, and for doing the unexpected.
But Musk has also attempted to take one of his companies – Tesla – private before. And that ended up with Musk himself getting a slap on the wrist from the SEC over some of his Tweets on the matter. So who knows where this tale's next chapter will take us.
This morning (our time), Twitter stock closed at US$47.08 a share, giving the social media company a market capitalisation of US$35.95 billion.
