by Tom Maloney

Elon Musk and Twitter have reached an agreement for the world’s richest man to buy the social media platform for $44 billion, after the company’s board of directors decided whether to agree to a leveraged buyout.

But Musk remains a mystery: How will he cover the $21 billion of the deal he personally guaranteed?

Musk detailed the $13 billion in bank financing that will be guaranteed by the social media company and the $12.5 billion backed by part of his $170 billion stake in Tesla. But he did not elaborate on how he would finance the rest.

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Twitter shares closed at $51.70 on Monday, down from the $54.20 investors receive for each share they own. According to Bloomberg News, the deal includes a clause that the billionaire must pay a fine if he backs out or breaks the deal.

In the end, there is little doubt that he will be able to get the money. According to the Bloomberg Billionaires Index, Musk is the richest person in the world with a net worth of $257 billion. However, it only has around $3 billion in cash and liquid assets, according to Bloomberg estimates.

This leaves you with the following options:

other investors

One way for Musk is to find investors who believe in his Twitter vision. This means that some of the capital will go to new or existing shareholders.

He has already hinted that this is a possibility. After the initial takeover bid for Twitter, Musk said its “purpose is to retain as many shareholders as the law allows.”

Larger shareholders, such as Twitter founder Jack Dorsey, may choose to keep their shares in the company. Dorsey’s stock is worth about $1 billion. Bloomberg reported on Monday that Musk is recruiting partners and talking to other potential investors.

share sale

Even if Musk isn’t able to bring together many other investors, he has the financial firepower to do it himself, thanks to his stake in Tesla, the crown jewel of his enormous fortune.

After using stock to support his $12.5 billion loan, Musk will own a stake in the unfunded automaker for roughly $21.6 billion, based on Tesla’s closing price on Monday. After taxes, the sale of that stock would come close to meeting his entire commitment, even though it would depend on the price he would receive for the shares.

Money and Cryptocurrencies

The other possibility: Musk is even richer than the Bloomberg Billionaires Index calculates.

Musk’s cash forecast is based on records and news reports on public stocks, but much of the information on his private finances is limited. For example, if his investment portfolio has outperformed the market, Musk may be richer than Bloomberg estimates and may not need new sources of funding to cover $21 billion.

Musk said in July that he owns Bitcoin, Ether and Dogecoin. While it’s unclear how much it holds or for how long, the top two cryptocurrencies have gained around 720% and 2,600% respectively since March 2020, a much sharper rally than the roughly 90% progress in the previous year. it happened. S&P 500 index.

Dogecoin rose nearly 30% on Monday after Musk agreed to buy Twitter.

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Elon Musk’s Twitter Purchase Boosts Cryptocurrency Dogecoin by 25%

Source: Exame

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