Elon Musk lines up $7bn backing for Twitter deal

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Elon Musk lines up $7bn backing for Twitter deal
Elon Musk lines up $7bn backing for Twitter deal

Africa-Press – Eswatini. Billionaire Elon Musk has lined up 19 new investors to help with his $44bn (£35.5bn) purchase of Twitter.

The commitments, totalling 7.1bn, will allow Mr Musk to reduce his own risk in the deal which has been approved by Twitter’s board but not completed.

Oracle co-founder and Mr Musk’s friend, Larry Ellison, is the single biggest contributor with $1bn.

Other investors include renowned Silicon Valley venture firm Sequoia Capital and crypto exchange Binance.

There is still some uncertainty that Mr Musk – also chief executive of electric car maker Tesla and rocket company SpaceX – will pull off his planned buyout.

Mr Musk, whose rank as the world’s richest person is tied to the value of his stake in Tesla, has said he plans to finance the purchase through a mix of loans, investments and cash.

In recent weeks, he sold about $8.5bn worth of Tesla shares, money that is expected to be used to fund the deal. He has lined up $13bn in loans from banks and is also borrowing against his Tesla holdings.

The new $7.1bn commitment will allow him to reduce that debt from an initially proposed $12.5bn to $6.25bn, according to the government filing.

Who are the investors?

The investment group includes massive firms such as Fidelity, which is known for managing retirement accounts. Meanwhile, Sequoia Capital has backed technology firms since the 1970s, including Apple, Google and Airbnb.

Many of the investors also have previous experience with Mr Musk.

Mr Ellison, for example, sits on the board of Tesla, while Dubai-based Vy Capital, which is putting in $800m, has backed Mr Musk’s tunnel construction start-up The Boring Company.

Binance chief founder Changpeng Zhao shared news of the deal on the social media site, casting it as a step toward “Crypto Twitter”.

He called his $500m investment a “small contribution to the cause”.

Qatar Holding, a sovereign wealth fund, is contributing $375m, while Saudi Arabian investor Prince Alwaleed bin Talal, who had initially opposed the buyout, also confirmed he would retain his $1.9bn stake in Twitter, writing that Mr Musk would be an “excellent leader” for the site.

“Kingdom Holding Company and I look forward to roll our ~$1.9bn in the “new” Twitter and join you on this exciting journey,” he added.

Mr Musk will also continue to hold talks with existing shareholders of Twitter, including the company’s former chief Jack Dorsey, to contribute shares to the proposed acquisition, according to the filing.

‘The financing is a huge risk’

Mr Musk, who has more than 90 million followers on Twitter, surprised many in April when it was revealed he was the social media site’s largest shareholder.

He ultimately rejected a seat on the board in favour of taking it private, saying the move would make it easier to improve the platform.

While his plans are unclear, he has floated ideas such as making some pay for the service, increasing transparency over how Tweets appear and cleaning up spam accounts.

CNBC reported on Thursday, citing sources, that he also plans to take on the role of chief executive temporarily.

Shares in Twitter rose after the new commitments were revealed, but continue to trade lower than Mr Musk’s buyout price of $54.20 – a sign of lingering questions about the deal.

Shares in Tesla were down 6%. The price has sunk more than 15% over the last month.

How Elon Musk might change Twitter

Who is Elon Musk?

A big decline in their worth could put the purchase at risk, said David Yoffie, professor at Harvard Business School.

“It’s by no means a sure thing that he will actually close on this deal,” he says. “The financing is a huge risk.”

But Dan Ives, analyst at Wedbush Securities, said the new investor group will help reduce those fears.

“This was a smart financial and strategic move by Musk that will be well received across the board,” he wrote, adding that it “shows the Twitter deal is now on a glide path to get done by the end of this year.”

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