Elon Musk is looking to take on more financing for his $44 billion deal in taking over Twitter and is in talks with a few high net-worth individuals and large investment firms for that. According to the people who are familiar with the matter, the tech mogul is trying to tie up less of his fortune in the deal.
Elon Musk is the richest person in the world today and according to Forbes, his net worth is around $245 billion. However, most of his wealth is linked to his company Tesla’s shares. Musk revealed that after his agreement to buy Twitter, he has sold around $8.5 billion worth of the electric car maker company’s stocks.
According to sources, if Musk is successful in obtaining the new financing, which will most probably come in the form of preferred or common equity, it could reduce his cash contribution of $21 billion to the deal along with a margin loan he secured against his shares in Tesla.
Sources have revealed that some of the major private equity firms like Apollo Global Management INC and Ares Management Corp and hedge funds are in talks with Musk regarding offering preferred equity financing for the takeover. Just like a bond or a loan pays regular interest, preferred equity would pay a fixed dividend from Twitter.
Musk is yet to decide whether he will join hands with the partners to write the equity check required for the deal. According to sources, he does not want to take on more debt for the current Twitter deal.
Another source said that Musk is also holding discussions with some of the major shareholders in Twitter regarding the possibility of them rolling their stake into the deal instead of cashing out. As he’s taking the social media platform private, Musk tweeted that he will try to keep as many investors in Twitter as possible. Since the matter is confidential, the sources have requested anonymity.
On Monday, Tesla shares ended trading in New York up 3.7% at $902.94. According to Dan Ives (Wedbush Securities MD), this news was a relief for investors as Musk was heavily dependent on his Tesla shares for the Twitter deal financing. If Musk walks away now, he has to pay roughly $1 billion termination fee to Twitter and the company can even sue him to complete the deal.
