Tesla CEO Elon Musk takes a $46.5 billion step to buy social media giant Twitter, but what comes next for the world's richest man and his most recent takeover attempt?
On Thursday, the billionaire entrepreneur revealed in a filing that he had secured the funds to buy the social media company with mostly borrowed money. The filing shows that a group of banks led by Morgan Stanley was prepared to lend Musk up to $25.5 billion, including a $12.5 billion loan pledged to the value of the CEO's Tesla shares.
Elon Musk's Twitter Takeover
Furthermore, the billionaire would use equity financing to provide for the other $21 billion included in the offer. Currently, Musk is Twitter's largest shareholder, with a 9% stake in the company. But recently, the world's richest man made an offer to buy the entirety of Twitter for $43 billion. The social media giant used a "poison pill" provision aimed at preventing him from completing his takeover attempt.
On Thursday, Musk planned to counter the poison pill provision by continuing to explore a so-called tender offer to acquire all of the company's shares from current stockholders. On the same day, the company's stock was up about roughly 1%, up to $47 per share, as per NBC News.
Furthermore, Musk said that he has not yet received a formal response from the social media giant's board regarding his offer to acquire all its shares that he does not currently own, priced at $54.20 per stock. The deal would value the entirety of the company at roughly $41 billion if agreed.
Musk also said he was "seeking to negotiate" a definitive acquisition agreement and revealed that he was prepared to begin such negotiations immediately. The remarks directly contrast his previous statements in his acquisition offer that it was his best and final offer.
According to CNN, in the days following his initial takeover bid, many questioned whether or not Musk would actually be able to finance his attempt to acquire the entirety of Twitter. The doubts grew after an interview where he said, "I'm not sure I'll actually be able to acquire [Twitter]."
What is a Tender Offer?
Whenever an individual or party wants to buy a publicly-traded company, the simplest and most common way is a board-approved merger. The negotiations for such a move begin in secret, and the two sides haggle before arriving at a deal.
Shareholders get the right to vote, and the affair is all-or-nothing as typically, the buyer walks away with the entire company with a simple majority. But if the vote fails, the buyer goes away empty-handed.
On the other hand, a tender offer, which is what Musk is planning to use with Twitter, instead makes a direct appeal to shareholders to sell or tender their shares at a specific price. This can be used in friendly deals, but the real value of this process is on hostile bidders when the target company's board does not wish to engage in the deal, the Wall Street Journal reported.
Related Article: Elon Musk's Offer To Buy Twitter Gets Brutally Rejected, Tesla CEO Fires Back at Saudi Prince
