Musk Pledges Tesla Shares as Collateral... Raises 57 Trillion Won for Twitter Acquisition Funding

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Elon Musk, CEO of Tesla, decided on the 21st (local time) to secure a bank loan using Tesla shares as collateral to acquire social media platform Twitter.

According to the Wall Street Journal (WSJ) and others, Musk reported to the U.S. Securities and Exchange Commission (SEC) on the same day a funding plan worth $46.5 billion (57.567 trillion KRW) for the Twitter acquisition.

Musk plans to raise $25.5 billion of the acquisition funds through bank debt. About half of this, $12.5 billion, will be a Tesla stock-backed loan. The financial institutions providing the loans include Morgan Stanley and Bank of America (BoA) from the U.S., Barclays from the U.K., Mitsubishi UFG Financial Group (MUFG) and Mizuho Bank from Japan, and Soci?t? G?n?rale and BNP Paribas from France.

Additionally, Musk stated he would secure $21 billion through equity financing, which means raising funds by issuing shares, but did not disclose specific plans for this.

Major foreign media speculate that Musk might sell his remaining Tesla shares excluding the stock-backed loan portion or secure partners to join the Twitter acquisition. It is also known that cooperation with Apollo Global Management, which is considering participating in the acquisition, is under review. On the same day, the New York Post reported, citing multiple sources, that Musk is discussing the possibility of collaborating with the U.S.-based large private equity firm Thoma Bravo for the Twitter acquisition.

In his filing, Musk also revealed that he is considering a hostile takeover method called a tender offer. This involves directly purchasing shares from other shareholders to secure management control. Earlier, when he tweeted “Love Me Tender,” the title of an Elvis Presley hit song, the market interpreted it as a hint toward a tender offer to directly buy shares from other shareholders.

Alongside this, Musk established three holding companies named ‘X Holdings’ in Delaware. He plans to funnel the Twitter acquisition funds into one of these holding companies and, if the acquisition succeeds, merge this entity with Twitter.

The Twitter board decided to implement a poison pill strategy to counter Musk’s acquisition attempt. The poison pill, used as a defense against hostile M&A, grants existing shareholders the right to purchase shares at a price significantly lower than the market value.

On the afternoon of the same day, Twitter’s stock was trading on the New York Stock Exchange at a level 0.39% higher than the previous close.

This content was produced with the assistance of AI translation services.