Musk Brings In New Investors Contribute To $ 7 Billion To Twitter Deal

Elon Musk has brought in more than a dozen new investors to help fund its $ 44 billion acquisition of Twitter, including the billionaire Larry Ellison and venture capital firm Sequoia Capital, according to securities documents filed Thursday morning.

The investors will contribute $ 7 billion to help fund Twitter’s purchase, with the rest coming from Mr. Musk’s own pocket or through loans.

Mr. Musk said he would fund the deal with a $ 12.5 billion loan against his shares in Tesla, the electric vehicle company he runs. As a result of the new equity commitments, Mr. Musk said he was reducing the size of that loan against Tesla shares from $ 6.25 billion to $ 12.5 billion.

He also said he has secured $ 13 billion in other loans from seven banks and committed $ 21 billion of his own cash. Mr. Musk has not yet outlined the sources of that cash.

The 18 investors listed on Thursday’s filing are a mix of big names such as Fidelity as well as so-called family offices – firms that manage wealth of billionaires and other rich individuals. Binance, the cryptocurrency exchange, is contributing $ 500 million, while an entity is affiliated with Mr. Ellison, the Oracle co-founder, is investing $ 1 billion. Sequoia is putting up $ 800 million, and Qatar Holding, a sovereign wealth fund, is contributing $ 375 million.

Mr. Musk’s representative has been canvassing a wide array of investors in recent days, according to two people who received information about a potential investment. Some traditional private equity firms had previously looked into possibly investing in the deal, but were unwilling to invest on the terms offered.

The new funds could give investors more confidence that the deal would be closer, as a number of investors have been betting against that likelihood, especially given the amount of capital that Mr. Musk may be personally on the hook for his unpredictable nature. The deal is not set for close to three to six months, and Mr. Musk must pay $ 1 billion breakup fee if his financing falls apart.

“This was a smart financial and strategic move by Musk that would be well received across the board,” said Daniel Ives, managing director and analyst at Wedbush, an investment firm.

Mr. Ives said he expected Mr. Musk brought in additional equity partners that could help reduce roughly $ 20 billion in cash he personally committed to the deal. Shares of Twitter were up more than 2 percent in premarket trading.

Mr. Musk made an offer to buy Twitter on April 14 for $ 54.20 a share, after he built up enough stock in the company to become its largest shareholder. He had a board seat down and the restrictions it would have imposed on him. At the time, Mr. Musk said he had lost confidence in Twitter’s management of what he believed would help the platform achieve its “societal imperative” free speech.

The company’s board adopts a “poison pill,” which is a mechanism to slow down and buy some time. Board members were concerned about the direction that Mr. Musk would take the company and its financing options, since much of his wealth was tied up in Tesla shares.

In the weeks leading up to the offer, Mr. Musk had suggested that Twitter get rid of advertising, an open-source algorithm and more to emphasize free speech principles, among other changes.

But on April 25, Mr. Musk struck a deal to buy Twitter for roughly $ 44 billion. Twitter’s board had run out of options, and Bret Taylor, the chairman, told the company’s 7,000 employees that day that “the board unanimously decided to offer Elon the best value for our shareholders.”

Anupreeta Das and Melina Delkic contributed reporting.

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