Mystery! Elon Musk buys Twitter, but where will Tesla chief get $21 bn from?
Elon Musk and Twitter Inc. reached an agreement for the world’s richest man to buy the social networking platform for $44 billion, resolving the pressing question of whether the company’s board would consent to the leveraged buyout deal.
On Musk’s side, though, there remains a mystery: How is he going to cover the $21 billion equity portion of the transaction that he’s personally guaranteed?
Musk, 50, has outlined the $13 billion in bank financing secured by the social-media company and the $12.5 billion backed by a pledge of some of his $170 billion Tesla Inc. stake. But he’s been short on details about how he’ll fund the remainder.
There’s little doubt he can come up with the money. Musk is the world’s richest person, with a fortune of $257 billion, according to the Bloomberg Billionaires Index. However, he has just about $3 billion in cash and somewhat liquid assets, according to Bloomberg estimates.
That leaves him with the following options:
One path for Musk is finding like-minded investors who buy into his vision for Twitter to join him in his purchase. That would mean some of the equity portion comes from new or existing shareholders.
He’s already hinted that such a strategy may be in the cards. After his initial offer to buy Twitter, Musk said at a TED event that “the intent is to retain as many shareholders as is allowed by the law.”
Private U.S. companies are generally limited to fewer than 2,000 shareholders, meaning most retail investors won’t continue to own Twitter if the buyout closes.
But larger shareholders, like Twitter founder Jack Dorsey, might choose to keep their holdings in the company if they believe in Musk’s vision. Dorsey’s stake is worth almost $1 billion. Bloomberg News reported Monday that Musk
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