Sources: Elon Musk is evaluating various debt packages, including preferred debt and a loan against his shares of Tesla, to secure financing for his Twitter bid

The world's richest man is trying to shore up debt financing, including potentially taking out a loan against his shares of Tesla, so he can buy Twitter for $43 billion.

New York Times 2022-04-20 Lauren Hirsch

Context & Ripple Effects

Musk is weighing a financing mix that would put Tesla shares behind part of his proposed Twitter acquisition. Within days, filings said he had secured $46.5B in acquisition financing, including a Morgan Stanley loan, turning exploratory funding into a formal bid structure.

The choice of share-backed borrowing mattered because related coverage later characterized the $12.5B facility as a risky margin loan secured by Tesla stock. The deal’s financing burden persisted after the buyout, with Musk’s team later exploring new Twitter share sales to repay acquisition debt.

First-order effects

Musk’s financing options put Tesla shares at the center of the Twitter bid, exposing him to the constraints of a loan secured by his existing equity.
Twitter’s prospective lenders and sellers gain a clearer path to a funded offer as Musk assembles debt alongside his own capital.

Second-order effects

Tesla shareholders become indirectly exposed to the acquisition’s financing structure, since a margin loan ties Musk’s collateral position to the value of Tesla stock.
The debt package shifts pressure onto Twitter’s post-deal finances: related coverage identifies $13B of buyout debt that later required repayment planning.

Third-order effects

The sequence shows how a large acquisition funded partly by a founder’s concentrated public-equity stake can carry financing risk from the bid into the acquired company’s capital structure.
If sponsors increasingly rely on pledged founder shares rather than fully committed equity, lenders’ collateral terms and the acquired asset’s debt capacity become more tightly linked.

The trend: High-profile acquisitions are increasingly being structured around layered debt and concentrated founder equity, extending financing risk beyond the initial bid.

Discussion

@coreypein Corey Pein on x
“a loan against his shares of Tesla” How would that work? If Tesla tanks does that mean Musk effectively pays less for the loan? https://www.nytimes.com/...
@laurenshirsch Lauren Hirsch on x
Elon Musk Races to Secure Financing for Twitter Bid https://www.nytimes.com/...
@coreypein @coreypein on x
Does this imply he thinks Twitter is a better business than Tesla? What does that say about Tesla? I think gravity may be about to catch up with this guy.
@mikeisaac @mikeisaac on x
heres @LaurenSHirsch on what's happening in elon world to make the Twitter bid a real thing: it's a race to finance the deal by talking to banks and private equity giants https://www.nytimes.com/...
@firstadopter @firstadopter on x
If he wanted financial partners, publicly saying he did not care about the economics in managing Twitter probably was not wise https://twitter.com/...
@jack @jack on x
[Responding to thread comparing CNN's motives vs. Tucker Carlson's] i'm sure. and we certainly have seen what twitter does positive and negative. I think the common denominator is the current ad model for all media, not just social media.
@financialtimes @financialtimes on x
Elon Musk's $43bn bid to buy Twitter is struggling to draw interest from several large institutions with the financial firepower to pull off such a large leveraged buyout in part because of concerns over the social media group's profitability https://www.ft.com/...
@sonalibasak Sonali Basak on x
The Wall Street scuttle on whether to back the big Twitter takeover Cash flow is an issue for any bank or private credit firm thinking of throwing financing into the equation Great thread ⁦⁦@AntoineGara⁩ ⁦@JFK_America⁩ ⁦@EricGPlatt⁩ https://www.ft.com/...
@timnitgebru @timnitgebru on x
@jack ... A big part of the problem is that social media platforms are artificially making a lot more money because they're not paying for the necessary resources that are required to make the platforms safe, or at least safer than they are now. E.g. https://time.com/...
@bdsams Brad Sams on x
I'll admit my M&A knowledge isn't on the bleeding edge but don't you have to have the funds aligned prior to making an offer? https://twitter.com/...
@carnage4life @carnage4life on x
Elon Musk is struggling to get funding to buy Twitter because large funds don't think it's a good business. I've said before that it's a red flag that Parag's most interesting idea of decentralizing Twitter actually worsens versus improves the business. https://www.ft.com/...
@johniadarola John Iadarola on x
Imagine what real problems he could be busy solving if he didn't view everything in the world through the lens of his own ego and his endless addiction to pointless additional riches. https://twitter.com/...
@goldman Jason Goldman on x
Definitely having a track record of lying about financing is an obstacle. Also an obstacle: saying “I don't care about the economics at all” when you're trying to borrow billions. Folks he's trying to finance with care about economics so much they'll be made into covenants. https…
@bendreyfuss Ben Dreyfuss on x
I am very proud to not have an overarching opinion about Elon Musk generally but I would like to point out that this seems to be the exact situation we have right now. https://twitter.com/...
@kateconger Kate Conger on x
lots of scoopy details on how Elon Musk plans to fund his bid for Twitter from @LaurenSHirsch https://www.nytimes.com/...
@stanphylcap @stanphylcap on x
“according to multiple people briefed on the discussions, Apollo is only considering providing debt or preferred equity funding, rather than an equity cheque.” Shocker: https://twitter.com/... https://twitter.com/... https://twitter.com/...
@trungtphan Trung Phan on x
WSJ reports that PE firm Apollo is participating in a bid for Twitter and that the social network is “in play”. If true, this means Twitter is for sale and the Board's duty narrows to one responsibility: maximize shareholder value (AKA get highest price). Here's a breakdown🧵
@danprimack Dan Primack on x
As @LesliePicker first reported: Apollo only involved on debt/lending side of a potential Twitter bid. Any equity reference would be some sort of convertible note.
@samro @samro on x
“Apollo, which owns Yahoo, has also been evaluating potential cooperation between the online-media company and Twitter, the people said.” 👀👀 https://twitter.com/...
@sawyermerritt @sawyermerritt on x
NEWS: Apollo is considering participating in a bid for Twitter according to people familiar with the matter, by backing Elon Musk's $43 billion offer. Twitter is expected to rebuff Elon's offer in the coming days, some of the people said. https://www.wsj.com/...
@elonmusk Elon Musk on x
A social media platform's policies are good if the most extreme 10% on left and right are equally unhappy
@therecount @therecount on x
Gov. Ron DeSantis (R-FL) threatens Twitter after it activated “poison pill” plan to prevent Elon Musk's acquisition: “We're gonna be looking at ways the state of Florida potentially can be holding these Twitter board of directors accountable for breaching their fiduciary duty.” h…
@elonmusk Elon Musk on x
@garyblack00 Board salary will be $0 if my bid succeeds, so that's ~$3M/year saved right there
@elonmusk Elon Musk on x
🎶 Love Me Tender 🎶
@bobbyallyn Bobby Allyn on x
One thing to keep in mind when trying to figure out what @jack thinks about a potential @elonmusk acquisition of Twitter: Jack's still on the board until next month, and he DID vote for the poison pill to derail the takeover attempt. Twitter spokesman just confirmed.
@lanceulanoff Lance Ulanoff on x
I think this is what Twitter wanted: Hold off Musk and attract more potential buyers. No matter what, hard to see Twitter coming out of this without new owners.
@reckless Nilay Patel on x
This man would not last a day moderating a medium-size neighborhood parents' Facebook group https://twitter.com/...
@chestermissing @chestermissing on x
Elon Musk, the white South African who wants to tell the world how freedom of speech works. https://twitter.com/... https://twitter.com/...
@biancoresearch @biancoresearch on x
TWTR surging after hours https://www.wsj.com/...
@matt_levine Matt Levine on x
We pushed each other so hard for years for this one newsletter. And we f[******] blitzed it boys. https://www.bloomberg.com/...
@kurtwagner8 Kurt Wagner on x
I don't know how @jack feels about the poison pill but just because the board came to a “unanimous” decision in the end doesn't mean everyone on the board was happy with it. The optics here are very important https://twitter.com/...
@jackposobiec @jackposobiec on x
Elon buying Twitter = REEEEE Zuck buying election = Zzzzzz
@jonnajarian Jon Najarian on x
would you eat at a restaurant where the chef wouldn't eat her/his own cooking? This $TWTR board is an absolute joke and not a funny one https://twitter.com/...
@matt_levine Matt Levine on x
two can play this extremely dumb game of using 420 constantly
@danprimack Dan Primack on x
2/ One issue for PE is that Elon's already set a high price — although the TWTR board could argue superior offer based on financing/likelihood of close.
@danprimack Dan Primack on x
I have no reason to believe VC firms, as opposed to PE firms, are talking with Elon about helping to finance his bid. That said, some of the bigger VC shops are now RIAs, so at least theoretically would have the structural flexibility to participate.
@kantrowitz Alex Kantrowitz on x
Jack's position in all this is so fascinating. 1) Excited to have Elon on the board. 2) Criticizes the board 3) Votes with the board to make Elon's acquisition more difficult. https://twitter.com/...
@jamcnn @jamcnn on x
“If there is one lesson from mobile it is just how important notifications a; a secondary consideration is how important identity . If you can know how to reach someone, and have the means to do so, you are set”.- ⁦@benthompson⁩ https://stratechery.com/... https://twitter.com/...
@davidjoachim David S. Joachim on x
“Basically Musk seems to have broken the law to buy his shares, but no one can do much about it,” @matt_levine writes https://www.bloomberg.com/... @bopinion https://twitter.com/...
@modestproposal1 @modestproposal1 on x
After a weekend of M&A cosplay featuring bizarrely awful takes, please read https://www.bloomberg.com/...
@tcarmody Tim Carmody on x
“There is a popular belief that, since Musk offered a cash acquisition at a price that is a decent premium to the market price, the board is somehow either obligated to accept his deal or at least obligated to let the shareholders decide. This is wrong.” https://www.bloomberg.com…
@mikeisaac @mikeisaac on x
there are folks who have been crowing that TWTR must accept musks offer who are either acting in bad faith (probably) or clueless about how boards, mergers and acquisitions work, or both very good breakdown in here pointing to many reasons that isnt true https://www.bloomberg.com…
@ivanthek @ivanthek on x
Last week, I was discussing with someone on this website good ol' front-end loaded, two-tier tender offers, and now Matt Levine has written about them. (It's not a coincidence.) https://twitter.com/...
@bobonmarkets Robert Burgess on x
Twitter has a poison pill now. https://www.bloomberg.com/... via @bopinion
@loudmouthjulia Julia Alexander on x
“Musk tweeted ‘Love Me Tender.’ Because he is engaged in an annoying meme-driven maybe-hostile-takeover-battle, everyone interpreted this to mean something like 'maybe I will do a tender offer for Twitter, or maybe not, who knows, aren't I a little scamp.” https://www.bloomberg.c…
@caseynewton Casey Newton on x
“Maybe I will do a tender offer for Twitter, or maybe not, who knows, aren't I a little scamp.” https://www.bloomberg.com/...
@trungtphan Trung Phan on x
Ben Thompson agrees that Musk can unlock Twitter potential. How? Split company in two: ◻️ One company would be the core Twitter service, including the social graph (TwitterServiceCo) ◻️ The other would be all of the Twitter apps and the advertising business (TwitterAppCo) https:/…

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