Elon Musk lines up $7.1 billion from Larry Ellison and others for Twitter takeover
Elon Musk has secured about $7.1 billion in new financing commitments, including from billionaire Larry Ellison, a Saudi prince and Sequoia Capital, to help fund his proposed $44-billion takeover of Twitter.
The equity commitments from 19 investors come as the Tesla billionaire marshals capital to bankroll one of the biggest tech industry takeovers. Musk had originally said he planned to fund the deal in part with a $12.5-billion loan against his shares in Tesla Inc., the electric-vehicle company he runs.
The new funding will enable him to reduce by half the size of that margin loan to $6.25 billion, making the deal less risky for both Musk and his lenders. It also slightly reduces the amount of cash Musk needs to put up personally.
CNBC reported that Musk is expected to serve as temporary chief executive of Twitter for a “few months,” after he completes the deal.
Saudi Prince Alwaleed bin Talal, chairman of the board at Kingdom Holding Co., made the biggest contribution, agreeing to commit almost 35 million shares in Twitter — worth $1.9 billion — to retain a stake in the company after Musk’s takeover, according to an amended securities filing Thursday morning. Ellison, the co-founder of Oracle Corp. who has a big stake in Tesla and a seat on its board, committed $1 billion through his trust.
His approach may have seemed unconventional or half-baked, but Elon Musk’s strategy to buy Twitter was based on sound negotiation principles, experts say.
Other investors named in the filing Thursday include the world’s largest crypto exchange, Binance Holdings Ltd., Brookfield Asset Management, Fidelity Management & Research and Qatar Holding.
Changpeng Zhao, chief executive of Binance, which promised $500 million, tweeted that it was “a small contribution to the cause.”
With the financing picture becoming clearer, the market seems to be coming around to the idea that the deal will close. The gap between Twitter’s stock price and the $54.20 per share that Musk offered to pay for the company is at its narrowest point since April 26. Twitter shares rose 2.7% to $50.36 on Thursday. The deal is set to close later this year, and the two sides have each agreed to pay a $1-billion breakup fee if it falls apart.
The world’s wealthiest person reached an agreement April 25 to acquire Twitter using a financing plan that has alarmed some Tesla investors. In addition to pledging tens of billions of dollars’ worth of his Tesla shares to support margin loans, Musk vowed to line up some $21 billion of equity. That number has risen to $27.25 billion, according to Thursday’s filing. Musk has sold more than $8.5 billion of Tesla stock to finance the deal.
After acquiring a 9% stake in Twitter, Elon Musk questioned free speech on the platform and asks whether it is undermining democracy.
“In this game of high stakes poker, Ellison and the impressive list of backers will remove more of an overhang from Tesla shares as the Musk leverage of shares now becomes less onerous,” said Dan Ives, analyst at Wedbush. “This was a smart financial and strategic move by Musk that will be well received across the board.”
Musk’s latest backers include a bevy of traditional asset managers, venture capital firms, boutique hedge funds and one of the world’s largest pools of capital. Qatar Holding, a unit of the nation’s wealth fund, has agreed to commit $375 million.
Alwaleed previously rejected Musk’s bid, stating that it failed to come “close to the intrinsic value of Twitter.”
Musk is also in discussions with Twitter co-founder Jack Dorsey on contributing some of his shares toward the acquisition.
Ellison, 77, is the richest person in the group besides Musk. The corporate software titan has a net worth of $95.6 billion, placing him 11th on the Bloomberg Billionaires Index. He’s not an active Twitter user — his only tweet was a decade ago — but he does share some of Musk’s political views. Ellison is a major Republican donor and hosted a fundraiser for former President Trump in 2020.
Silicon Valley venture capitalist Marc Andreessen, who has publicly feuded with Dorsey on Twitter, has agreed to commit $400 million via his fund Andreessen Horowitz, known as a16z. Fellow venture firm Sequoia Capital is putting up $800 million.
Ben Horowitz, a general partner at Andreessen Horowitz, cited the work of Twitter founders Evan Williams and Dorsey as a reason the firm invested. “We believe in EV and Jack’s vision to connect the world and we believe in Elon’s brilliance to finally make it what it was meant to be.”
Several Tesla investors are among those committing support for Musk’s Twitter bid, including Ellison, who owns 1.45% of the carmaker’s outstanding shares, and Fidelity Management & Research Co., which owns about 1%. Both are among Tesla’s biggest investors.
Smaller investors include Witkoff Capital, real estate tycoon Steven Witkoff’s firm, and Cartenna Capital, a hedge fund set up by Peter Avellone, a former Millennium Management portfolio manager.
Musk had been building up a stake in Twitter since early this year, eventually amassing more than 9% of the company and becoming its largest individual shareholder. He was offered a seat on the board, which he turned down because of the restrictions it would have placed on him for buying more shares. Instead, he made a formal offer for Twitter on April 14, subject to financing that wasn’t immediately spelled out.
With more than 90 million followers on Twitter, Musk is one of the platform’s most prominent and outspoken users. He is known for sometimes cryptic or mysterious tweets, lobbed at all hours of the day, on topics as diverse as cryptocurrencies, space travel and whether Twitter should have an edit button.
He has said his main motivation in buying Twitter is to make it a bastion for free speech, which he says is “essential to a functioning democracy.”
Some of the ideas he has thrown out for Twitter include that it limit advertising, open-source its algorithm and do more to emphasize free-speech principles.
