While billionaires are well-renowned to control the global economy, reshape politics, and much more; the wealthiest among them exercise even more control and power. Elon Musk, for instance, the wealthiest man on the planet recently struck an unassuming deal of $44 billion to purchase Twitter.
Musk, a famous philanthropist and founder/CEO of Tesla, SpaceX, and many popular companies developed a great interest in Twitter. On March 4, 2022, Musk purchased a 9.2% stake in Twitter estimated to be around $2.9 billion, as per the share price at that time. This made him the largest shareholder of the company. The following day, Twitter CEO Parag Aggarwal announced that the billionaire will be joining the board but later that week reversed his decision citing a series of unusual tweets in which Elon complained about Twitter dying.
An All-cash offer to buy Twitter
The billionaire wanted to set things right on the social media platform by transforming Twitter into a free-speech platform, as he shares. So, he made an offer to buy Twitter in an all-cash deal. He was willing to pay $54.20 per share for all the shares, evaluating the social media giant at an enormous $43.4 billion. Musk filed the same with the U.S. Securities and Exchange Commission and shared the news with his 92 million+ followers on Twitter.
Soon, on April 15th, the board announced in a press release that they were adopting a limited-duration shareholder rights plan. According to the press release, “The Rights Plan is intended to enable all shareholders to realize the full value of their investment in Twitter. The Rights Plan will reduce the likelihood that any entity, person, or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders.”
The rights plan was a clear move from the board to prevent Elon from buying the social media firm. While waiting for the board to respond to his all-cash offer, Musk decided to break down his funding for the $43 billion bid. He intended to get the entire money from three major buckets, as shared on Tech Crunch:
“Musk intends to borrow around $13 billion in various fashions; borrow $12.5 billion against his own equity holdings; and pay around $21 billion from his own holdings. It’s a somewhat complicated collection of funding sources, but Musk’s bid is hardly small, so the path to collecting the needed cash in one pile is understandably convoluted.”
Source: AP Photo/John Raoux, File / AP Newsroom