Musk says he can afford to buy Twitter, but investors aren’t so sure

“A mere personality conflict does not disqualify an offer,” Pascarella said. “But if they tie Elon’s personality traits to the likelihood of the deal happening – can you find the money and will the deal actually go through – then that’s totally up for grabs. in consideration.”

Mr Musk is the richest person in the world, with a net worth well north of $200 billion. But his wealth is mostly tied to Tesla stock. As chief executive of Tesla and one of its largest shareholders, Mr Musk owned about a fifth of the electric car maker in December. But Tesla limits its executives to using no more than 25% of their stock as loan collateral, and Mr. Musk has already pledged some of his Tesla stock for other loans, according to company filings. .

He could theoretically pledge the rest of his eligible Tesla shares to raise enough money to buy Twitter. But Tesla remains an extremely volatile stock, trading between $766 and $1,145 within weeks, which would give pause to banks considering lending Mr Musk against his Tesla holdings.

Mr. Musk could also approach banks to help provide the $15 billion to $20 billion in debt financing that analysts say the offer requires, which would be added to Twitter’s balance sheet. But Morgan Stanley, the investment bank that advises Mr. Musk, is not known on Wall Street for raising the kind of large-scale funding that a purchase of Twitter would require.

Morgan Stanley could commit to banks with larger balance sheets, such as JPMorgan Chase and Bank of America. But a tense history between JPMorgan and Mr. Musk could force the bank to do nothing. JPMorgan sued Mr Musk last year over a misleading Twitter post in which he claimed to have secured funding for his bid to take Tesla private, alleging it violated the terms of a contract between the two entities.

JPMorgan declined to comment.

A third option for Mr. Musk is private equity. When he considered taking Tesla private in 2018, he enlisted the services of Silver Lake, a technology-focused private equity firm. Silver Lake already has a connection to Twitter. The company’s co-chief executive, Egon Durban, joined Twitter’s board in 2020 after a $1 billion investment by Silver Lake.

But there is also a catch. When it invested in Twitter, Silver Lake signed a deal that severely limits its ability to acquire more than 5% of the company. This deal could hamper his willingness or ability to team up with Mr. Musk.

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