Post Date: Post Date – 11:30 PM, Sunday – October 30
It’s unclear how Musk got all the financing to complete his deal to buy the company for $44 billion and take it private.
Elon Musk has taken over Twitter and fired its CEO and other executives. Trading in the company’s shares was suspended on the New York Stock Exchange on Friday, and the stock will be officially delisted early next month, according to filings with securities regulators. So what now?
Why did Musk buy Twitter?
One reason Musk bought Twitter this week was because he had no choice. The world’s richest man has spent months trying to back out of a $44 billion purchase deal he originally signed in April. But the uncertainty has been so disruptive to Twitter’s business that it sued him in Delaware Chancery Court to force the deal to close, with a judge giving a Friday deadline to complete the deal or Musk. May face trial in November.
As for why Musk wanted to own Twitter in the first place, the reasons are far more complicated. “There is a lot of speculation about why I bought Twitter and what I think about advertising,” he said in an open letter Thursday to companies that sell ads on Twitter, which is how the company makes money. “Most of it is wrong.”
How did Musk buy Twitter?
It’s unclear how Musk got all the financing to complete his deal to buy the company for $44 billion and take it private. But many of the promises to the Tesla CEO were made as early as the spring.
Earlier this year, banks including Morgan Stanley and Bank of America signed a $12.5 billion loan that Musk needs to buy Twitter and take it private. A solid contract with Musk ties the bank to the financing, although changes in the economy and debt markets since April may make the terms less attractive.
Investors who are expected to take an ownership stake in Twitter are also expected to put in billions. Musk’s initial equity partners included a range of parties, from the billionaire’s tech friends with like-minded ideas about Twitter’s future, such as Oracle co-founder Larry Ellison, to A fund controlled by Middle Eastern royalty.
Billionaire Saudi Prince Alwaleed bin Talal said Friday that he and his kingdom holding company collectively hold $1.89 billion in existing Twitter shares, making them the company’s largest shareholders after Musk . Another equity investor, cryptocurrency exchange Binance, confirmed on Friday that it invested $500 million.
The more equity investors involved in the deal, the less Musk himself will pay. Much of Musk’s wealth is tied to shares in his electric car company. He has sold more than $15 billion worth of Tesla stock since April, presumably to pay for his stake.
