Elon Musk is racing to secure funding for his $43 billion bid to buy Twitter.
Morgan Stanley, the investment bank working with Mr. Musk on the potential deal, has been calling banks and other potential investors to shore up financing for the offer, four people with knowledge of the situation said. Mr. Musk is first focused on raising debt and has not yet begun to seek equity financing for his bid, one of the people said.
Mr. Musk is evaluating various packages of debt, including more senior debt known as preferred debt and a loan against his shares of Tesla, the electric carmaker that he runs, two of the people said. Apollo Global Management, the private equity firm, is among the parties considering offering debt financing in a bid for Twitter. The equity he needs is likely to be sizable.
Mr. Musk is aiming to pull together a fully funded offer as soon as this week, one of the people said, though that timeline is far from certain. The people with knowledge of the discussions were not authorized to speak publicly because the details are confidential and in flux.
It is unclear if Mr. Musk’s efforts will be successful, but they go toward addressing a key question about his Twitter bid. Last week, Mr. Musk, the world’s wealthiest man, made an unsolicited offer for the social media company, saying that he wanted to take it private and that he wanted people to be able to speak more freely on the service. But his offer was regarded skeptically by Wall Street because he did not include details about how he would come up with the money for the deal.
poison pill.” A poison pill would effectively prevent Mr. Musk from owning more than 15 percent of Twitter’s shares. The 50-year-old had been building up a stake in the company and owns more than 9 percent of Twitter, making him at one point its single-biggest individual shareholder.
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The billionaire’s offer could be worth more than $40 billion and have far-reaching consequences on the social media company.
Mr. Musk, whose net worth has been reported at $255 billion, did not respond to a request for comment. On Tuesday, in what appeared to be a veiled allusion to Twitter, he tweeted his thoughts about social networks and their policies.
funding secured,” propelling Tesla shares higher. He did not have financing prepared for such a deal. The Securities and Exchange Commission later filed a securities fraud lawsuit against him, accusing him of misleading investors. Mr. Musk paid a $20 million fine and agreed to step aside as Tesla’s chairman for three years.
Some investors are wary of getting involved in financing Mr. Musk’s Twitter bid, concerned about the risks of teaming up with the mercurial billionaire and a company as politically contentious as Twitter, one person with knowledge of the situation said. For banks, offering a loan against Tesla stock is also risky, given the stock’s volatility.
Mr. Musk has not publicly articulated his business plan for Twitter, though he has spoken about reversing Twitter’s moderation policies and providing additional transparency about how its algorithms work. He has made clear that profit is not his focus, potentially complicating efforts to invest with traditional Wall Street financiers.
“This is not a way to sort of make money,” Mr. Musk said in an interview at a TED conference last week. “My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important.”
Mr. Musk’s offer for Twitter stands at $54.20 a share. Several analysts have said the company’s board is likely to accept only an offer of $60 a share or more. Twitter’s stock rose above $70 a share last year when the company announced goals to double its revenue, though its stock has since fallen to around $45 as investors have questioned its ability to meet those targets.