Musk Says He Has the Means to Buy Twitter, but Investors Aren’t So Sure

“A easy persona battle, it doesn’t disqualify a suggestion,” Mr. Pascarella stated. “But when they’re tying Elon’s persona traits to the probability of the deal occurring — are you able to give you the money, and can the deal truly shut — then that may very a lot be considered.”

Mr. Musk is the richest individual on this planet, with a web value pegged at properly north of $200 billion. However his wealth is usually tied up in Tesla inventory. As chief govt of Tesla and considered one of its largest shareholders, Mr. Musk owned a couple of fifth of the electrical carmaker as of December. However Tesla limits its executives to utilizing not more than 25 % of their inventory as collateral for borrowing, and Mr. Musk already has pledged a portion of his Tesla shares for different loans, in accordance with firm filings.

He may theoretically pledge the remainder of his eligible Tesla shares to lift sufficient funding to purchase Twitter. However Tesla stays a wildly risky inventory, buying and selling between $766 and $1,145 in a matter of weeks — which might give pause to banks contemplating lending to Mr. Musk in opposition to his Tesla holdings.

Mr. Musk may additionally go to banks to assist present the $15 billion to twenty billion in debt financing that analysts say the bid requires, which might be added to Twitter’s steadiness sheet. However Morgan Stanley, the funding financial institution that’s advising Mr. Musk, will not be identified on Wall Avenue for pulling collectively the sort of large-scale financing a purchase order of Twitter would require.

Morgan Stanley may rope in banks with greater steadiness sheets, like JPMorgan Chase and Financial institution of America. However a tense little bit of historical past between JPMorgan and Mr. Musk may compel the financial institution to take a seat it out. Final yr, JPMorgan sued Mr. Musk over a deceptive Twitter publish through which he claimed to have secured funding for his provide to take Tesla personal, alleging that it violated the phrases of a contract between the 2 entities.

JPMorgan declined to remark.

A 3rd choice for Mr. Musk is personal fairness. When he contemplated taking Tesla personal in 2018, he famously introduced within the providers of Silver Lake, a technology-focused personal fairness agency. Silver Lake already has a connection to Twitter. The agency’s co-chief govt Egon Durban joined the Twitter’s board in 2020 after a $1 billion funding by Silver Lake.

However there’s a catch there, too. When it invested in Twitter, Silver Lake signed an settlement that severely limits its skill to accumulate greater than 5 % of the corporate. That settlement may hinder its willingness or skill to workforce up with Mr. Musk.