Elon Musk’s Twitter takeover: Who is funding the deal?

Elon Musk completed the $44 billion deal announced in April to take Twitter Inc private, assuming ownership of the influential social media platform by immediately firing top executives.

"The bird is freed," he tweeted, an apparent reference to his desire for the company to place fewer restrictions on the content that can be posted. However, Musk provided little detail on how he intends to achieve his objectives. Musk reintroduced the deal earlier this month after previously attempting to walk away from it. Musk expressed excitement about acquiring Twitter, but he and his co-investors are overpaying.

Musk promised $46.5 billion in equity and debt financing for the acquisition, which would cover the $44 billion purchase price and closing costs. Morgan Stanley and Bank of America Corp have committed to providing $13 billion in debt financing.

Musk's $33.5 billion equity commitment included his $4 billion Twitter stake and the $7.1 billion he had secured from equity investors such as Oracle co-founder Larry Ellison and Saudi Prince Alwaleed bin Talal.

Debt part

Bank of America, Barclays, BNP Paribas, Mizuho, Morgan Stanley, MUFG, and Societe Generale have committed $13 billion in loans, with Morgan Stanley alone contributing approximately $3.5 billion to the deal.

According to the Wall Street Journal report, Twitter will have to pay more than $1 billion in annual interest payments after the takeover, up from $51 million in 2021.

Over the last five years, the social platform has reported annual earnings before interest, taxes, depreciation, and amortization of around $700 million.

Equity part

Elon Musk had pledged a total of $33 billion in equity financing.

The transaction will cost the 51-year-old billionaire approximately $27 billion in cash. According to Reuters, Musk has approximately $20 billion in cash after selling a portion of his Tesla stake in multiple transactions in November and December last year, as well as April and August this year.

Musk also owns 9.6 percent of Twitter stock, which is worth more than $4 billion. The $2 billion shortfall is expected to be covered by a stake sale in Tesla or SpaceX, or by a loan from banks secured by the stocks.

The remaining funds, estimated to be around $6 billion, will be raised from investors such as Oracle co-founder Larry Ellison, cryptocurrency platform Binance, and asset management firms Fidelity, Brookfield, and Sequoia Capital.

As part of the agreement, Larry Ellison has written a $1 billion check. Saudi Prince Alwaleed bin Talal transferred to Elon Musk nearly 35 million shares (worth $1.89 billion) that he already owned.

Sequoia Capital Fund and VyCapital, both investors in Musk's tunnel construction firm The Boring Company, have offered $800 million and $700 million for a stake in Twitter, respectively.

Binance will invest $500 million for the stake, according to the terms of the agreement.

Also Read: Musk takes over Twitter, says 'let the good times roll'

Also Read: ‘The bird is freed’: Elon Musk on firing top executives after taking over Twitter