Elon Musk has given fresh fuel to speculation he would launch a tender offer for Twitter shares in the event that the board resists his proposal to acquire 100 per cent of the company for $43 billion (€39 billion) and take it private.
The 50-year-old billionaire Tesla and SpaceX chief tweeted a cryptic message early on Wednesday morning with blank space for a word followed by the phrase "is the Night." The missing language may be "Tender," as per the F Scott Fitzgerald book title, or it could be "Tonight," as Musk used seven underscores for the blank space.
It comes as Morgan Stanley, the investment bank working with Mr Musk on the potential deal, has been calling banks and other potential investors to shore up financing for the offer, four people with knowledge of the situation said. Mr Musk is first focused on raising debt and has not yet begun to seek equity financing for his bid, one of the people said.
Mr Musk (50) is evaluating various packages of debt, including more senior debt known as preferred debt and a loan against his shares of Tesla, the electric carmaker that he runs, two of the people said.
The New York Post on Tuesday reported Mr Musk was willing to invest between $10 billion and $15 billion of his own money to take Twitter private, citing two sources familiar with the matter.
Debt financing
Apollo Global Management, a private equity firm, is among the parties considering offering debt financing in a bid for Twitter. The equity he needs is likely to be sizable.
Mr Musk is aiming to pull together a fully funded offer as soon as this week, one of the people said. The people with knowledge of the discussions were not authorised to speak publicly because the details are confidential and in flux.
Last week, Mr Musk, the world’s wealthiest man, made an unsolicited offer for the social media company, saying that he wanted to take it private and that he wanted people to be able to speak more freely on the service. But his offer was regarded sceptically by Wall Street because he did not include details about how he would come up with the money for the deal.
While Twitter’s board has not rejected Musk’s offer, it responded days later with a “poison pill,” a tactic that would effectively prevent the Tesla founder from owning more than 15 per cent of Twitter’s shares. Mr Musk owns more than 9 per cent of Twitter, making him its single-biggest individual shareholder.
Twitter is expected to provide an update on its deal-making prospects when it reports quarterly earnings April 28th.
Mr Musk’s offer for Twitter stands at $54.20 a share. Several analysts have said the company’s board is likely to accept only an offer of $60 a share or more. Twitter’s stock rose above $70 a share last year when the company announced goals to double its revenue, although its stock has since fallen to around $45 as investors have questioned its ability to meet those targets.
Public messages
Mr Musk’s most recent public message before the hint about a potential tender bid addressed the issue of moderation online, saying “a social media platform’s policies are good if the most extreme 10 per cent on left and right are equally unhappy” in another tweet. He has garnered a following of more than 82 million users on the service and has tweeted more than 17,000 times, with his recent messages focusing on Twitter itself and how it could be improved.
His habitual style on the social platform has been to express himself through web memes and implications, having previously tweeted “seize the memes of production” in the time between his initial investment in Twitter and the SEC filing that made it public.
He’s also shown a fondness for 420 references to pot smoking, including with his offer of $54.20 a share. His post may also have been a reference to the date, April 20th.
Twitter's share price jumped by 27 per cent when Mr Musk announced he had acquired a 9.2 per cent stake at the start of this month and he later escalated his interest with the unsolicited $43 billion proposal to take the company private. – This article originally appeared in The New York Times / Bloomberg / Reuters
