Elon Musk looks to have won over Saudi Prince Alwaleed Bin Talal, while bringing on board a series of new equity investors, in his $44 billion pursuit of Twitter.
Updated at 6:48 am EST
Twitter (TWTR) – Get Twitter, Inc. Report shares moved higher Thursday after Tesla (TSLA) – Get Tesla Inc Report CEO Elon Musk said he’s received around $7.1 billion in new equity funding, including a $1 billion contribution from Oracle (ORCL) – Get Oracle Corporation Report founder Larry Ellison, to help finance his $44 billion takeover of the social media group.
In Securities and Exchange Commission filings made public Thursday, Musk said he’s received equity commitment letters from various investors, including Sequoia Capital, that totaled $7.14billion. The move will likely reduce the cost Musk would provide from his personal fortune — much of it linked to the value of Tesla shares — to complete the transaction while boosting the overall equity portion of the proposed takeover to $27.45 billion. Musk also reduced the level of his margin loan with Morgan Stanley to $6.25 billion from $12.5 billion.
The filing also noted that Prince Alwaleed Bin Talal of Saudi Arabia, a significant Twitter shareholder who had previously dismissed Musk’s $54.20 per share bid for the group as “not even close” to its fundamental value, will contribute 34.95 million of his shares and retain an equity commitment in the group after its privatized.
The move could also cement Musk’s intention to go through with the $44 billion takeover, given both the complexity surrounding the deal and the fact that his personal portfolio of businesses and leadership position has left him with little time to devote to the kind of large-scale turnaround he claims is required at the micro-blogging website.
Twitter shares were marked 2.63% higher in pre-market trading immediately following news of the new financing to indicate an opening bell price of $50.35 each. Tesla shares, meanwhile, were marked 0.85% lower at $944.50 each.
Earlier this week, Reuters reported that Musk, who has already sold around $8.5 billion in Tesla shares over the past month, is seeking financing alternatives to achieve the $21 billion he needs to provide personally for the deal, which is expected to close sometime in the autumn, and wants to tie-up less of his approximately 172 million in Tesla shares along the way.
CNBC’s David Faber reported the Musk is looking to syndicate a portion of hits equity commitment, suggesting he’s looking for partners as opposed to financiers.
