Bloomberg — Elon Musk has secured about $7.1 billion of new financing commitments for his proposed $44 billion takeover of Twitter Inc. (TWTR), winning the backing of some of the world’s largest investors.
The equity commitments come as the Tesla Inc. billionaire marshals capital to bankroll one of the biggest tech industry takeovers. The investors named in the filing on Thursday include crypto exchange Binance, Brookfield Asset Management, Fidelity Management & Research, and Qatar Holding.
Musk has also won the support of fellow entrepreneur and Oracle Corp. co-founder Larry Ellison, who has a big stake in Tesla and a seat on its board. Ellison’s trust has committed $1 billion to finance Musk’s takeover.
The world’s wealthiest person reached an agreement on April 25 to acquire Twitter using a financing plan that’s alarmed some Tesla investors. In addition to pledging tens of billions of dollars worth of his Tesla shares to support margin loans, Musk vowed to line up some $21 billion worth of equity. That number has risen to $27.25 billion, according to Thursday’s filing.
The new equity allows Musk to cut the size of the margin loan he previously struck with an array of investment banks, down to an aggregate principal amount of $6.25 billion from $12.5 billion, making the deal less risky for both Musk and his lenders. Twitter shares rose 2.5% in pre-market trading.
Saudi Prince Alwaleed bin Talal, chairman of the board at Kingdom Holding Company and one of Twitter’s largest backers, has agreed to commit almost 35 million shares in Twitter -- worth $1.9 billion -- to retain a stake in the company following Musk’s takeover.
He previously rejected Musk’s bid, stating that it failed to come “close to the intrinsic value of Twitter.”
Musk is also in discussions with Twitter co-founder Jack Dorsey on contributing some of his shares toward the acquisition.
Musk’s latest backers includes a bevy of traditional asset managers, venture capital firms, boutique hedge funds, and one of the world’s largest pools of capital. Qatar Holding, a unit of the nation’s wealth fund, has agreed to commit $375 million.
Silicon Valley venture capitalist Marc Andreessen, who has publicly feuded with Dorsey on Twitter, has agreed to commit $400 million via his fund A16Z. Fellow venture firm Sequoia Capital is putting up double that, with $800 million.
|Musk’s New Backers||Commitmet|
|Lawrence J. Ellison Revocable Trust||$1 billion|
|Sequoia Capital Fund, L.P.||$800 million|
|AH Capital Management, L.L.C. (a16z)||$400 million|
|Qatar Holding LLC||$375 million|
|Aliya Capital Partners LLC||$360 million|
|Fidelity Management & Research Company LLC||$316.1 million|
|Strauss Capital LLC||$150 million|
|BAMCO, Inc. (Baron)||$100 million|
|DFJ Growth IV Partners, LLC||$100 million|
|Witkoff Capital||$100 million|
|Key Wealth Advisors LLC||$30 million|
|A.M. Management & Consulting||$25 million|
|Litani Ventures||$25 million|
|Tresser Blvd 402 LLC (Cartenna)||$8.5 million|
|Honeycomb Asset Management LP||$5 million|
Several Tesla investors are among those committing support for Musk’s Twitter bid, including Ellison, who owns 1.45% of the carmaker’s outstanding shares, and Fidelity Management & Research Co., which owns about 1%. Both are among Tesla’s biggest investors.
Smaller investors include Witkoff Capital, the real estate-backed family office, and Cartenna Capital, a hedge fund set up by Peter Avellone, a former Millennium Management portfolio manager.
“In this game of high stakes poker, Ellison and the impressive list of backers will remove more of an overhang from Tesla shares as the Musk leverage of shares now becomes less onerous,” said Dan Ives, analyst at Wedbush. “This was a smart financial and strategic move by Musk that will be well received across the board.”
It remains unclear how much of that would come from selling a portion of his Tesla stake. Musk has sold more than $8.5 billion of Tesla stock to finance the deal.