Elon Musk Revises $44 Billion Twitter Financing Plan, Shares Jump: Report


Tesla CEO Elon Musk on Wednesday revised the financing plan for his proposed $44 billion (about 3,41,300 crore) purchase of Twitter, raising investor hopes that the unpredictable billionaire still intends to strike a turbulent deal due to Market turmoil not a mask – fully explainable concerns about the number of fake accounts on Twitter.

The news overshadowed the regularly scheduled annual shareholder meeting on Twitter earlier Wednesday. Shareholders did not directly address Musk’s deal — that vote will be scheduled at a future date yet to be determined, should the deal go ahead. Twitter shares jumped 5.5 per cent to $39.22 (about 3,000 rupees) in after-market trading, based on a 3.9 per cent increase during regular trading.

The funding changes outlined in a regulatory filing will cut $6.25 billion (about Rs 48,517 crore) from the lending package that Musk had previously lined up to acquire Twitter. This means that Musk will need to increase this amount in equity obligations rather than debt. This will bring the ownership – that is, equity-based part – of the deal to $33.5 billion (about Rs 260 crore), up from $27.25 billion (approximately Rs 21,515 crore) Musk revealed three weeks ago.

The filing with the Securities and Exchange Commission didn’t go into much detail about where Musk would get the additional equity, but confirmed that he was still trying to get his friend and former Twitter CEO Jack Dorsey – a supporter of the takeover – to arrest him. Equity in the financing package.

Dorsey, who is also a co-founder of Twitter, owns a 2.4 percent stake that is currently worth about $700 million (about Rs 5,433 crore), based on the company’s closing share price on Wednesday, according to FactSet Research. Musk owns approximately 9.6 per cent of the shares worth $2.7 billion (about Rs 20,960 crore).

Wednesday was also Dorsey’s last day as a member of Twitter’s board of directors, the date set when he resigned as CEO last November.

The nuts and bolts of the financing package have not been as important to investors as the news that Musk apparently still plans to complete his purchase on Twitter. Serious doubts about Musk’s intention to the deal have been raised since he announced that he was “on hold” – something experts say he can’t do unilaterally – until Twitter provides public evidence to back up his claims that less than 5 percent of his accounts are fake, supported by spam bots. .

Even assuming the share price continues to rise in regular trading Thursday, Twitter is still turning below $54.20 (about Rs 4,000) per share that Musk agreed to pay just a month ago.

Dan Ives, an analyst at Wedbush Securities, said the persistent gap between Musk’s bid price and Twitter’s share price indicates that most investors still believe the billionaire will pull out of the deal unless the company agrees to a lower price. Twitter’s board of directors has so far insisted that it won’t.

Earlier this week, Ives estimated there was a 60% chance that Musk would cancel the Twitter deal and pay $1 billion (about Rs 7,763 crore) in breakup fees, risking a potential lawsuit by the company. With Musk now trying to secure a new funding package, Ives believes there is a 50-50 chance the deal will happen, but only if Twitter’s board is willing to sell well below the agreed-upon price. “Mask is hedging his bets here, but the big elephant in the room is staying,” Ives said.

Twitter dealt with another potential headache on Wednesday by agreeing to a fine of $150 million (about 1,164 crore) to settle allegations that it violated the privacy of its users to help sell ads from 2013 to 2019 in a case brought by the US Department of Justice and the Federal Trade Commission.

Earlier in the shareholder meeting, CEO Paraj Agrawal stated in advance that the CEOs would not answer any questions regarding Musk’s offer. Even a question from a contributor asking what would happen to their stock if someone bought Twitter and deemed it private was dropped. (If this happens, the agreed purchase price will be paid to the shareholder per share and the share will be written off).

Musk did not join the meeting, although he could have been one of Twitter’s biggest contributors.

But the drama surrounding his show — almost all of Musk’s own making — threatened to move into action Wednesday. Contributors who submitted proposals to vote frequently invoked his name. One proposal, by the New York State Common Pension Fund, called for a report on Twitter’s policies and procedures on political contributions using corporate money. It passed in a preliminary vote.

Two proposals by conservative-leaning groups failed to garner enough votes to pass them. One called for a review of the “company’s impacts on civil rights and nondiscrimination” and referred to “anti-racism” programs that seek to establish “racial/social justice” as “extremely racist.” The other sought more disclosure of the company’s lobbying activities.

Many of the proposals spoke of the deep existential conflict that rages between Twitter users, employees, contributors, and employees. While contributors have criticized the company for what they see as too liberal policies and bias against conservatives (where there is no credible evidence), others have said the company has failed to protect users from harassment, abuse and misinformation.


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