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Elon Musk Races to Secure Financing for Twitter Bid

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.

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.

join the company’s board. At the time, Parag Agrawal, Twitter’s chief executive, and other board members said they welcomed Mr. Musk as a director given his use of the platform. Mr. Musk has more than 82.5 million Twitter followers and tweets frequently.

Mr. Musk and Mr. Agrawal also share similar perspectives about how to decentralize Twitter so that users can gain more control over their social media feeds, a tactic that both men see as a way of promoting more free speech. That move would also reduce the burden on Twitter, which has faced questions about toxic content and misinformation, to decide what posts can stay up and what should be taken down.

But then Mr. Musk rejected the board seat and began the effort to take over the company.

Twitter, which has brought on advisers from Goldman Sachs and JPMorgan Chase, has also been weighing whether to invite bids from other potential buyers, two people close to the company said. At least one interested party, the private equity firm Thoma Bravo, has emerged, though it is unclear whether it will ultimately submit an offer.

Kate Conger, Mike Isaac and Jack Ewing contributed reporting.

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Twitter Counters Elon Musk’s Takeover Bid With a Poison Pill

Poison pills have been around for decades. The lawyer Martin Lipton, a founding partner of Wachtell, Lipton, Rosen & Katz, invented the maneuver, also called a shareholder rights plan, in 1982. It was a way to shore up a company’s defenses against unwanted takeovers by so-called corporate raiders like Carl Icahn and T. Boone Pickens.

They have since become a part of the corporate tool kit in America. Netflix adopted a poison pill in 2012 to stop Mr. Icahn from buying up its shares. Papa John’s used one against the pizza chain’s founder and chairman, John Schnatter, in 2018.

Investors rarely try to get around a poison pill by buying shares beyond the threshold set by the company, according to securities experts. One said it would be “financially ruinous,” even for Mr. Musk.

But Mr. Musk, who is worth more than $250 billion and is the chief executive of Tesla and SpaceX, rarely abides by precedent. He announced his intention to acquire Twitter on Thursday, making public an unsolicited bid worth more than $40 billion. In an interview at a TED conference later that day, he took issue with Twitter’s moderation policies, which govern the content shared on the platform.

Twitter is the “de facto town square,” Mr. Musk said, adding that “it’s really important that people have the reality and the perception that they are able to speak freely within the bounds of the law.” Twitter currently bans many types of content, including spam, threats of violence, the sharing of private information and coordinated disinformation campaigns.

Mr. Musk argued that taking Twitter private would allow more free speech to flow on the platform. “My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization,” he said during the TED interview. He also insisted that the algorithm Twitter uses to rank its content, deciding what hundreds of millions of users see on the service every day, should be public for users to audit.

Mr. Musk’s concerns are shared by many executives at Twitter, who have also pressed for more transparency about its algorithms. The company has published internal research about bias in its algorithms and funded an effort to create an open, transparent standard for social media services.

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Discovery Closes In on Acquisition of WarnerMedia

“I am sure you aren’t surprised that it came with a fair amount of anxiety, disappointment and concern relative to the changes it would trigger,” he wrote. “All considered, I remain confident we have set the right path.”

The creation of Warner Bros. Discovery could prompt changes among existing media companies, forcing smaller companies like Paramount to find a way to get bigger.

“There’s Disney, HBO Max, Netflix, Amazon and Apple — that’s five,” said Michael Nathanson, a media analyst, pointing to the leading streaming services. “You don’t want to be in position six, seven or eight. At some point, they’ll say, ‘We have to find a dance partner.’”

The biggest question will be what happens to HBO Max and Discovery+, the merging companies’ streaming services. Initially, the two could be sold as a bundle, but over time they will be brought together into one giant streaming service, Mr. Zaslav told staff on Friday.

HBO and HBO Max, which consists of new television series and movies, as well as an impressive lineup from the Warner Bros. library, have more than 70 million subscribers; Discovery+ has more than 20 million.

Even brought together, that pales next to Netflix, which has more than 220 million paying subscribers, most of them outside the United States. HBO Max has only recently expanded into foreign territory, though Discovery has built a robust international business.

“A new giant is born when they prove they have international scale,” Mr. Nathanson said of Warner Bros. Discovery. “I don’t think Discovery content on HBO Max in the U.S. is a needle mover. But because international is such uncontested territory, they can have more impact outside the U.S.”

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SoftBank’s Woes Are Mounting

For the past decade, SoftBank and its founder, Masayoshi Son, grabbed headlines mainly for the Japanese conglomerate’s eye-popping investments, becoming a fixture in the American technology scene by spending freely on start-ups and fundamentally reshaping how such companies had been funded.

There was the world’s largest tech investment fund. The billions of dollars pumped into WeWork, the co-working giant. And Mr. Son’s splashy purchase of one of Silicon Valley’s priciest homes.

Now, the bad news is piling up.

This week, SoftBank’s planned $40 billion sale of Arm, a chip designer, to Nvidia, the Silicon Valley chip maker, fell apart because of regulatory setbacks. Shares in a handful of big tech companies that SoftBank owns stakes in, from the Chinese internet giant Alibaba to DoorDash, the food delivery service, have plunged in recent months amid a wider sell-off in high-growth tech stocks. And one of Mr. Son’s key deputies, Marcelo Claure, left the firm in January after a bitter pay dispute — the latest senior executive to depart the firm in the past year.

The slump in SoftBank’s fortunes was reflected in its latest earnings report. The firm said that its quarterly earnings fell 97 percent from a year ago, although it managed to eke out a small profit of $251 million during the three months that ended on Dec. 31. SoftBank’s shares, which trade publicly in Tokyo, stayed relatively flat this week, although they are already down by more than half in the past 12 months, as investors grow increasingly wary of SoftBank’s big bets that haven’t paid off.

he purchased an estate in Woodside, Calif., for $117 million — one of Silicon Valley’s most expensive homes. He then bought a majority stake in the mobile carrier Sprint in 2013 for roughly $22 billion, installing Mr. Claure as chief executive the next year. Sprint later merged with T-Mobile.

that country’s crackdown on its tech giants. SoftBank owns stakes in both companies, which trade on U.S. exchanges although Didi plans to move its listing to Hong Kong. While SoftBank invested far below the initial public offering price of DoorDash, the online food ordering company — one of the best performing stocks in 2021 — is now trading around its I.P.O. price.

The share price of SoftBank’s biggest holding, Alibaba, has dropped by about 60 percent from its October 2020 high. SoftBank put more than $10 billion into WeWork, which went public last year and is now trading at less than $6 billion. And after the Arm deal with Nvidia collapsed, SoftBank plans to take the chip design company public instead.

“Even if they’re going through this pain at the moment, they’re still actually in the black,” Mr. Ferragu said of the firm’s latest results.

SoftBank has seen its share of internal turmoil, too. In recent months, at least four senior investors have left or announced plans to leave.

Last month, SoftBank also lost Mr. Claure, one of its most high-profile executives, following an acrimonious compensation battle. Mr. Claure, once a key deputy and close confidante of Mr. Son’s, had argued that his boss had promised to pay him $2 billion over several years for his current and future work.

Twitter post: “People don’t leave their jobs or their companies. They leave their bosses. Treat the people who work for you right.”

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Condé Nast Knows Faded Glory Is Not in Style

“Unless we want to look like a museum, we had to change and change pretty radically,” he added.

For the past year, Ms. Wintour has been focused on the next step of the process: turning seven of Condé Nast’s biggest publications — Vogue, GQ, Wired, Architectural Digest, Vanity Fair, Condé Nast Traveler and Glamour — into global brands, each under one leader, cutting costs and streamlining the sharing of content across both print magazines and digital platforms.

“Instead of having 27 Vogues or 10 Vogues go after one story, we have one global Vogue go after it,” Ms. Wintour said. “So it’s more like a global newsroom with different hubs.”

The switch in focus from local to global has not gone down well everywhere. Tina Brown, the former editor of The New Yorker and Vanity Fair, filleted the plan as “suicidal” in an interview in August with The Times of London.

“Obviously there are some stories that work, particularly if you think about fashion, that’s a global language, and music, so there are stories that will work across all territories and then those that absolutely won’t,” Ms. Wintour said. “We’re very aware of that.”

Ms. Wintour is also ensuring that there are unlikely to be any more Anna Wintours — no more imperial editors in chief each with their own fiefs, a job Ms. Wintour herself helped create as a stylish but exacting gatekeeper of fashion and culture. The brands are now run by “global editorial directors,” most of whom are based in New York, with regional heads of content reporting to them.

“Before, you created stories for publication and it came out once a month and that was great,” she said, describing the old domain of an editor in chief. Now the global editorial directors and heads of content are working across platforms that include “digital, video, short and long form, social, events, philanthropic endeavors, membership, consumer, e-commerce,” Ms. Wintour said.

“You touch so many different worlds,” she added. “Honestly, who wouldn’t want that job?”

In the midst of the change at Condé Nast, plenty of people decided they didn’t.

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F.T.C. Sues to Block Nvidia’s Takeover of Arm

WASHINGTON — The Federal Trade Commission on Thursday sued to block Nvidia’s $40 billion acquisition of a fellow chip company, Arm, halting what would be the biggest semiconductor industry deal in history, as federal regulators push to rein in corporate consolidation.

The F.T.C. said the deal between Nvidia, which makes chips, and Arm, which licenses chip technology, would stifle competition and harm consumers. The proposed deal would give Nvidia control over computing technology and designs that rival firms rely on to develop competing chips.

“Tomorrow’s technologies depend on preserving today’s competitive, cutting-edge chip markets,” said Holly Vedova, the director of the F.T.C.’s competition bureau. “This proposed deal would distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals.”

Federal antitrust regulators have promised greater scrutiny of mergers and a clamp down on monopolies in a push to reinvigorate competition in the economy. The action against the deal is the first major merger decision by the Federal Trade Commission under the leadership of Lina Khan, a critic of big corporate mergers and monopolies in technology. Ms. Khan is among a slew of top antitrust officials picked by President Biden to rein in the power of Silicon Valley giants.

promised to break open gas, telecom and pharmaceutical markets to bring down consumer prices at the gas pump and for home internet and prescriptions. Last month, the Justice Department sued to stop Penguin Random House, the largest publisher in the United States, from acquiring its rival Simon & Schuster.

In a statement, Nvidia said it would contest the F.T.C. lawsuit. “We will continue to work to demonstrate that this transaction will benefit the industry and promote competition.”

The F.T.C. suit, if successful, would not have much immediate financial impact on Nvidia or Arm. Shares in Nvidia rose slightly in aftermarket trading.

But a successful suit would be a blow to Nvidia’s ambitions to play a more central role in shaping the direction of the computer industry — particularly in the field of artificial intelligence.

Arm, a British company that the Japanese conglomerate SoftBank bought in 2016, licenses designs for microprocessors and other technology that other companies use in their semiconductors. Its technology has been wildly successful, providing the calculating functions in essentially all smartphones and many other devices. Arm recently estimated its technology is used in about 25 billion chips per year.

Nvidia, based in California, is a dominant provider of chips used to render graphics in video games, technology it has adapted in recent years to also power artificial-intelligence applications used by cloud companies and self-driving cars.

Jensen Huang, the company’s chief executive, has been pushing the company to become a broader, “full-stack” provider of computing technology. In April, for example, Nvidia said it was building an Arm-based microprocessor for servers used in data centers.

In announcing the deal in September 2020 to buy Arm, Mr. Huang said the combination would create a premier company for advancing A.I. technology. He also promised to operate Arm without any change to its business model, acting independently and treating all chip customers fairly.

Mr. Huang said at the time that artificial intelligence would set off a new wave of computing and that “our combination will create a company fabulously positioned for the age of A.I.”

But the deal was controversial from the start, with some of Arm’s big customers, like Qualcomm, worried about the heightened competition from Nvidia and the possibility of a rival gaining access to their confidential information. Mr. Huang took a dig at Qualcomm’s new chief executive, Cristiano Amon, at an annual dinner hosted by the Semiconductor Industry Association last month in Silicon Valley, asking, “How is it possible that Cristiano knew every regulator on the planet?”

The deal had already attracted close scrutiny from regulators in Europe, particularly in the United Kingdom, where Arm’s headquarters in Cambridge is a major employer. Britain’s Competition and Markets Authority launched an in-depth inquiry into the transaction in November, citing both competition and national-security concerns.

The F.T.C. said the merger would give Nvidia access to sensitive information about its rivals, who license technology and designs from Arm.

“Licensees rely on Arm for support in developing, designing, testing, debugging, troubleshooting, maintaining and improving their products,” the F.T.C. said in a statement. “Arm licensees share their competitively sensitive information with Arm because Arm is a neutral partner, not a rival chip maker. The acquisition is likely to result in a critical loss of trust in Arm and its ecosystem.”

The vote to block the merger was unanimous among the F.T.C.’s commissioners. The full complaint filed by the agency is not expected to be released for a few days. An administrative trial for the lawsuit is scheduled for May 10.

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Trump’s $300 Million SPAC Deal May Have Skirted Securities Laws

Mr. Trump initially expected to announce his new social media company in August, according to a person briefed on the timing. But the plans were delayed after Mr. Trump’s son, Donald Trump Jr., voiced reservations about the Digital World deal, according to people familiar with the negotiations.

On Aug. 3, Mr. Orlando wrote to the S.E.C. asking for clearance to accelerate Digital World’s I.P.O. for that month, only to withdraw the request two days later. When the SPAC eventually went public on Sept. 8, raising $293 million, Digital World said it had still not identified a merger target.

Less than three weeks later, on Sept. 27, Mr. Orlando went to Mar-a-Lago, Mr. Trump’s private club in Florida, to sign a “letter of intent” — an initial formal step toward a merger of Digital World and Trump Media, according to a person with knowledge of the event. For a new SPAC, it was an extraordinarily swift turnaround; most SPACs take at least a year to find and merge with a target.

On Oct. 20, Mr. Orlando returned to Mar-a-Lago, where he and Mr. Trump signed the final paperwork under chandeliers in a cavernous golden ballroom, according to an attendee. Donald Trump Jr. and the former “Apprentice” contestants, Mr. Moss and Mr. Litinsky, were among those in attendance.

After the deal was announced last week, Digital World’s shares rocketed higher. This week, they plummeted. At least two of the anchor investors, D.E. Shaw and Saba Capital, sold much of their stock after the Trump deal came to light. Another prominent investor, Iceberg Research, announced that it was betting against the stock.

Even so, Digital World’s shares remain about seven times higher than before the Trump deal. On paper, at least, the company is worth more than $2 billion.

On Tuesday, as he was boarding a plane, Mr. Orlando wouldn’t say much about how the deal came together. “It’s been wild,” he said.

Kenneth P. Vogel, Michael Schwirtz and Shane Goldmacher contributed reporting. Susan C. Beachy contributed research.

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