Elon Musk has brought in more than a dozen new investors to help fund his $44 billion acquisition of Twitter, including the billionaire Larry Ellison and the venture capital firm Sequoia Capital, according to securities documents filed Thursday morning.
The investors together will contribute $7 billion to help fund Twitter’s purchase, with the rest coming from Mr. Musk’s own pocket or through loans.
Mr. Musk had said that he would fund the deal in part with a $12.5 billion loan against his shares in Tesla, the electric vehicle company he runs. As a result of the new equity commitments, Mr. Musk said he was reducing the size of that loan against Tesla shares to $6.25 billion from $12.5 billion.
He has also said that he has secured $13 billion in other loans from seven banks and committed $21 billion of his own cash. Mr. Musk has not yet outlined the sources of that cash.
The 18 investors listed in Thursday’s filing are a mix of big names such as Fidelity as well as so-called family offices — firms that manage the wealth of billionaires and other rich individuals. Binance, the cryptocurrency exchange, is contributing $500 million, while an entity affiliated with Mr. Ellison, the Oracle co-founder, is investing $1 billion. Sequoia is putting up $800 million, and Qatar Holding, a sovereign wealth fund, is contributing $375 million.
From Opinion: Elon Musk’s Twitter
Commentary by Times Opinion writers and columnists on the billionaire’s $44 billion deal to buy Twitter.
- Jane Coaston: Those who tweet belong to a very specific and limited group of people. It’s time to reconsider how consequential the platform truly is.
- Farhad Manjoo: Many worry that Twitter might get worse under Elon Musk. But there’s also room for it to become much better.
- Amelia Tait: If meaningless speech is what the billionaire hopes to cultivate, then perhaps his purchase of Twitter actually makes sense.
- Anand Giridharadas: Mr. Musk has embraced a flawed understanding of the free speech issue. That makes the deal particularly dangerous.
- Pamela Paul: The impending cloud of “Elon Muskiness” hanging over Twitter is mühlet to set off a wave of farewells to the platform.
Mr. Musk’s representatives had been canvassing a wide array of investors in recent days, according to two people who received information about a potential investment. Some traditional private equity firms had earlier looked at possibly investing in the deal, but were unwilling to invest on the terms offered.
The new funds could give investors more confidence that the deal will close, as a number of investors have been betting against that likelihood, particularly given the amount of capital that Mr. Musk may personally be on the hook for, along with his unpredictable nature. The deal is not set to close for three to six months, and Mr. Musk must hisse a $1 billion breakup fee if his financing falls apart.
“This was a smart financial and strategic move by Musk that will be well received across the board,” Daniel Ives, a managing director and analyst at the investment firm Wedbush.
Mr. Ives said he expected Mr. Musk to bring on additional equity partners that could help reduce the roughly $20 billion cash he has personally committed to the deal. Shares of Twitter were up more than 2 percent in premarket trading.
Mr. Musk on April 14 made an offer to buy Twitter for $54.20 a share, after he had built up enough stock in the company to be its largest shareholder. He had turned down a board seat and rejected the restrictions it would have imposed on him. At the time, Mr. Musk said he had lost confidence in Twitter’s management to do what he believed would help the platform achieve its “societal imperative” of free speech.
How Elon Musk Bought Twitter
A blockbuster deal. Elon Musk, the world’s wealthiest man, capped what seemed an improbable attempt by the famously mercurial billionaire to buy Twitter for roughly $44 billion. Here’s how the deal unfolded:
The initial offer. Mr. Musk made an unsolicited bid worth more than $40 billion for the influential social network, saying that he wanted to make Twitter a private company and that he wanted people to be able to speak more freely on the service.
The response. Twitter’s board countered Mr. Musk’s offer with a defense mechanism known as a “poison pill.” This well-worn corporate tactic makes a company less palatable to a potential acquirer by making it more expensive for them to buy shares above a certain threshold.
Securing financing. Though his original offer had scant details and was received skeptically by Wall Street, Mr. Musk moved swiftly to secure commitments worth $46.5 billion to finance his bid, putting pressure on Twitter’s board to take his advances seriously.
Striking a deal. With the financing in place, Twitter’s board met with Mr. Musk to discuss his offer. The two sides soon reached a deal, with the social media company agreeing to sell itself for $54.20 a share.
What’s next? Shareholders will vote on the offer, which will also be reviewed by regulators. The deal is expected to take three to six months to close. In the meantime, scrutiny is likely to be intense and several questions remain about Mr. Musk’s plans for the company.
The company’s board adopted a “poison pill,” which is a mechanism to slow a takeover attempt and buy some time. Board members were concerned about the direction that Mr. Musk would take the company and his financing options, because much of his wealth was tied up in Tesla shares.
In the weeks leading up to the offer, Mr. Musk had suggested that Twitter get rid of advertising, have an open-source algorithm and do more to emphasize free speech principles, among other changes.
But on April 25, Mr. Musk struck a deal to buy Twitter for roughly $44 billion. Twitter’s board had run out of options, and Bret Taylor, the chairman, told the company’s 7,000 employees that day that “the board unanimously decided the offer from Elon represented the best value for our shareholders.”
Anupreeta Das and Melina Delkic contributed reporting.