Elon Musk Secures $7B in Outside Funding for Twitter Takeover
The investors include Saudi prince Alwaleed bin Talal and Oracle co-founder Larry Ellison
Elon Musk has secured $7 billion in funding for his upcoming takeover of Twitter. The takeover will cost him $44 billion in total. This round of funding is from a group of investors, including the Qatar state investment fund, the tech tycoon Larry Ellison, and the world’s biggest cryptocurrency exchange.
Elon Musk Twitter acquisition
It has also been reported that Musk will serve as the Chief Executive of the social media platform temporarily. Prince Alwaleed bin Talal, The Saudi Arabian investor who had initially opposed the buyout, will now roll his $1.9bn stake into the deal instead of cashing out.
The financing plans for Tesla have put pressure on Tesla shares because it is believed that he might sell stock to finance the agreed bid. A filing published on Thursday has also revealed that the margin loan taken by Musk to finance the deal would go down to $6.25 billion from $12.5 billion.
Dan Ives, an analyst at Wedbush Securities, a US financial services firm, said, “In this game of high stakes poker, the impressive list of backers will remove more of an overhang from Tesla shares as the Musk leverage of shares now becomes less onerous.” He added that the report which says SpaceX planned to run Twitter himself appeared to be weighing on Tesla’s stock as the shared fell 7% to $884.56 in afternoon trading.
According to a filing with the US Securities and Exchange Commission, Ellison is putting $1bn into the transaction to take over Twitter. This is not a huge amount for Ellison, who is worth about $95bn. Ellison made his fortune as the founder of the database-software business Oracle.
The $7.1bn equity raising, in addition to the agreement with Prince Alwaleed, might mean that Musk’s personal contribution to the equity element of the deal could be less than $20bn, said an expert. Thanks to the margin loan, Musk has now reduced his total financial commitment by about $9bn.
Drew Pascarella, a senior lecturer of finance at Cornell University in the US, stated, “Elon has been chipping away at his financial commitments, both straight equity and via personal margin loans since the deal was announced. Today’s new third-party equity commitments – totalling $9bn, including Price Alwaleed’s almost $1.9bn equity rollover – brings Elon’s total commitments down from $33.5bn to as low as $24.6bn.”
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