Elon Musk collects $7 billion from investors for buying Twitter

taketonews

In a document filed with the Securities and Exchange Commission on May 4, disclosed by the american press the next day, Elon Musk informs that he will recover 7.14 billion dollars from 18 investors, to acquire Twitter. These financiers with varied profiles will allow the billionaire to reduce his personal risk in this operation to 44 billion dollars.

Thank you friends !

The big venture capitalists have instead avoided putting their hands in their pockets to support Elon Musk. The case is unusual for them, known to buy younger companies – Twitter was created in 2006 – to put them back on the market later. The procrastination and apparent improvisation of the operation did not help. The project boils down essentially to freedom of expression and the departure of Wall Street.

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The billionaire had to give some pledges to convince this multitude of major investors. According to New York Times, it aims to double the number of Twitter users by 2025, to reach 500 million users. The same applies to platform revenues over the same period. He also promised to attract tens of millions of paying subscribers to the service, a worthwhile return, and get the company back on the market within three years. He himself will take over the general management of the company for a time.

Clearly convincing arguments, in the first place for Musk’s friends or allies. Larry Ellison, co-founder of Oracle and member of the Board of Directors of Tesla, has agreed to put a billion dollars on the table. Asset manager Fidelity Management & Research, a historic investor in Tesla and SpaceX, is contributing $375 million. A sum in reality rather small since it manages hundreds of billions of dollars. Bamco, founded by Ron Baron, a top Tesla investor, put in $100 million.

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Then come more unexpected profiles. This is the case of Web3 players, often publicly mocked by Jack Dorsey, co-founder of Twitter, sometimes followed by his new friend Musk. The Binance exchange platform made a $500 million investment, described by its founder Changpeng Zao as ” small contribution to the cause “.

Venture capital firm a16z has released $400 million. In a lengthy Twitter thread, one of the company’s founders, Ben Horowitz, said he had great faith in Elon Musk. We believe in Elon’s genius for finally making Twitter what it was meant to be “. He is not the only one to put forward the aura of the billionaire as the first motivation to join this atypical adventure.

This is also what emerges from the speech of another actor in the operation, on Twitter, the Saudi Prince al-Waleed bin Talal said ” I believe you will be an excellent leader for @Twitter to propel and maximize its great potential “. The latter will indirectly pay 1.9 billion dollars. This investment, the most important, is not really one. This nephew of Saudi Arabia’s King Salman will simply keep the shares he already owns.

Initially, the prince was much less disposed towards Elon Musk. In mid-April he opposed the acquisition. Elon Musk took the opportunity to tackle him on freedom of expression within his kingdom. This freedom of expression, however excessively put forward by the billionaire, seems to have become more secondary. This also makes it possible to accommodate the sovereign wealth fund of Qatar and its 375 million dollars. The convictions and values ​​displayed by the 50-year-old quickly fade in the face of his ringing and stumbling interests.

The race for profits is on

It must be said that he really needs these 7.14 billion dollars to reduce the risks taken in this takeover. The sum will essentially be used to reduce its debt secured on Tesla shares. The 12.5 billion loans will be reduced to 6.25 billion dollars. The rest will reduce a little the equity that Elon Musk must bring.

So far the richest man in the world, whose fortune is based almost exclusively on the shares of his companies, has “only” recovered $ 8.5 billion by selling Tesla shares. A real question remains: how will he recover the amount of equity he must pay? To prevent Tesla’s share price from collapsing, it has already declared that it will not sell any more shares.

At the end of this whole affair, Elon Musk will be in debt of several billion dollars for a platform, certainly influential, but with relatively modest profits to these newcomers in comparison. In 2022, Twitter is expected to bring in $513 million. A more than honorable result for ordinary mortals, less for the technological giants. Musk will have to mobilize all the genius that is lent to him if he wants to be able to end up winning in the long term.

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