On October 28, billionaire Elon Musk completed the $46.5 billion acquisition of the microblogging site Twitter, which comprises the $44 billion purchase price plus the related charges of the transaction.
The deal specifies that the world’s richest man would pay $54.20 per share to common shareholders and, from now on, will run the social media empire as a private company.
Musk, the CEO of Tesla and SpaceX, used a mixture of debt and equity funding to buy Twitter.
Elon Musk receives funds from banking firms
Bank of America, Barclays, BNP Paribas, Mizuho, Morgan Stanley, MUFG, and Societe Generale are among the banking firms that have pledged a total of $13 billion in loans for the transaction, including Morgan Stanley alone, providing around $3.5 billion for closing the deal.
According to a Journal source, Twitter will have to pay more than $1 billion in yearly interest payments after the takeover, as opposed to $51 million in 2021.
Over the past five years, the social media network has reported $700 million in yearly earnings before interest, taxes, depreciation, and amortisation.
Elon Musk had promised to provide a total of $33 billion of equity financing.
The 51-year-old entrepreneur will personally invest almost $27 billion in the deal. According to reports, Musk has around $20 billion in cash after reducing his ownership in Tesla through a number of deals in November and December of last year and in April and August of this year.
Musk also has 9.6 percent of Twitter shares worth over $4 billion. The $2 billion shortfall is anticipated to be covered by the sale of stakes in Tesla, SpaceX or a bank loan secured by the stocks.
Investors are also lending money
The remaining $6 billion will be raised from investors such as Larry Ellison, the co-founder of Oracle and cryptocurrency exchange Binance and asset management companies Fidelity, Brookfield, and Sequoia Capital.
As part of the agreement, Larry Ellison has written a $1 billion check. In addition, Saudi Arabian Prince Alwaleed bin Talal gave Elon Musk approximately 35 million shares (worth $1.89 billion) he previously owned.
Sequoia Capital Fund and VyCapital, two investors in Elon Musk’s tunnel-building company The Boring Company, have made offers of $800 million and $700 million for stakes in Twitter, respectively.
As per the deal, Binance will invest half a billion dollars for the stake.
According to reports, Binance said, “We aim to play a role in bringing social media and Web3 together in order to broaden the use and adoption of crypto and blockchain technology,”