August 12, 2022

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Elon Musk is continuing his pursuit of Twitter. In an SEC filing [PDF] Thursday, Musk revealed that he has $46.5 billion in financing lined up to close the deal. The Tesla and SpaceX founder would cover $21 billion of the purchase price himself. A consortium of banks will loan him $12.5 billion against his shares of Tesla along with an additional $13 billion in financing.

Musk surprised just about everyone last week with an unsolicited offer of $43 billion for Twitter. The move came after he quietly purchased 9.2 percent of outstanding Twitter shares. He then rejected an offer to sit on the company’s board in order to be able to buy even more shares.

Musk’s vision for the social media site appears to be one largely unencumbered by moderation. “I invested in Twitter as I believe in its potential to be the platform for free speech around the globe,” Musk wrote to Twitter Chairman Bret Taylor last week. “I believe free speech is a societal imperative for a functioning democracy.”

Twitter was uninterested in the offer, which it believed undervalued the company, and its board of directors quickly approved a poison pill provision that would make a hostile takeover much more difficult. Under the plan, current shareholders would be able to buy more stock at a discount, which would shrink the relative size of Musk’s (and the Vanguard Group’s, with 10.3 percent) holdings.

With funding secured, Musk is now likely to make a tender offer to all of Twitter’s shareholders. That would in turn almost certainly force the board to engage in serious negotiations with him.

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Should the deal go through, it would be one of the all-time largest leveraged buyouts ever.