Elon Musk is in talks with large investment firms and high net worth individuals about the possibility of them financing his $44 billion acquisition of the micro-messaging network Twitter so he has to commit less of his assets, they said. sources familiar with the matter.
Banks that agreed last month to provide $13 billion in loans guaranteed by Twitter were reluctant to provide more debt for the Musk acquisition, given the San Francisco-based firm’s limited cash flow, Reuters reported last month. .
Musk has pledged to contribute $21 billion in cash for the operation.
The billionaire businessman could use the new financing to reduce his contribution to the principal check for the deal, the sources said.
Musk has also promised some Tesla shares to banks to arrange a $12.5 billion loan to help finance the deal. He may try to cut the size of the loan based on new investor interest in financing the deal, one of the sources said.
Investors such as venture capital firms, hedge funds and high-net-worth individuals are in talks with Musk to provide preferred capital for the acquisition, the sources said.
The preferred capital would receive a fixed dividend from Twitter, in the same way that a bond or a loan pays regular interest, but it would also appreciate along with the company’s shares.
Talks
Apollo Global Management and Ares Management are among the private equity firms that have been in talks to provide the financing, the sources added.
Tesla’s chief executive is still deciding whether to share some of the capital commitment for the acquisition with potential partners, according to the sources.
Musk is not currently looking to take on any more debt for the Twitter deal, they added.
It has also started talks with some of Twitter’s top investors about getting them involved in the business rather than selling their shares, one of the sources said.
Former Twitter CEO and current board member Jack Dorsey is considering whether to participate. The sources requested anonymity because the matter is confidential.
Musk revealed last week that he sold $8.5 billion in Tesla stock, without explaining the reason for the deal, but investors interpreted it to be to raise money for the Twitter acquisition.