Tesla CEO Elon Musk has the backing of several big name banks in order to get enough scratch together to make a play for Twitter.
Filings with the Securities and Exchange Commission dated April 20 show that Musk is “exploring whether to commence a tender offer to acquire all of the outstanding shares of Common Stock” with his original proposed price of $54.20 a share, totalling approximately $45.5 billion. The documents state that the Twitter board has yet to respond to the proposal.
It has been an open question before whether Musk would have the necessary capital to match his proposed value for the company, though the documents show he is borrowing from big name players, including Morgan Stanley Senior Funding, which has offered $25.5 billion in debt financing. Musk himself would commit $21 billion in equity financing, which will come from shares the CEO has in Tesla. CNBC has also reported that Bank of America, Barclays, MUFG, Societe Generale, Mizuho Bank, and BNP Paribas are helping to finance the buyout.
The fact that he’s “exploring” whether to make the tender offer means he has yet to provide it to the Twitter board, which has already adopted a poison pill in the form of a “Rights Plan,” allowing shareholders to buy additional shares in the company at a reduced price should anyone buy more than 15% of the company at once.
The Rights Plan basically means Musk has no choice but discuss his proposal with the board. The Telsa CEO has also been blasé about the idea his deal would fall through, saying last week during a TED Q&A “I am not sure I will actually be able to acquire it.”
Musk has repeatedly used the word “tender” in tweets to hint at this move, writing “___ is the night” earlier this week. It’s common enough for him as a regular Twitter user and troll, especially considering he likes to leave the “420” Easter egg in filings, such as the the $54.20 he’s proposing for each share. He’s gotten himself in trouble—a full SEC investigation, millions in fines, and stepping down as chairman of Tesla—for tweeting “funding secured” for a bid to take Tesla private in 2018 when he had not, in fact, secured funding. The share price was—what else?—$420.
Musk has claimed he is looking to break Twitter away from board control and open the platform up to all users to express themselves, even some that have been previously banned for effectively advocating violence. Many Republican officials have complained about misinformation being regulated by Twitter, and they’re very much in favor of Musk’s takeover.
Musk has a strange understanding of what it means for a social media company to be open for free speech. On April 19, Musk tweeted that “A social media platform’s policies are good if the most extreme 10% on left and right are equally unhappy.” As a self-proclaimed “free speech absolutist,” this seems somewhat of a self-defeating idea. It also ignores that, by their nature, the most extreme portions of either political spectrum are always going to be unhappy.