Tesla CEO Elon Musk has raised more than $4 billion by selling 4.4 million Tesla shares to take over Twitter. Musk previously announced plans to finance the acquisition of $46.5 billion and said that it would raise $21 billion in equity capital, but attention is focused on how to raise the remaining amount.
According to the Wall Street Journal (WSJ) on the 28th (local time), Musk reported to the Securities and Exchange Commission (SEC) that he had sold 4.4 million shares of Tesla stock worth $4 billion. It is known that the sale was made on the 26th-27th at $870-1000 per share.
On the 21st, before the acquisition agreement, Musk announced that it would raise the necessary funds in three ways: loans from banks such as Morgan Stanley ($13 billion), Tesla stock-backed loans ($12.5 billion), and equity capital ($21 billion). In terms of equity, the market interprets that Musk will sell his stake in Tesla to raise cash, and Tesla’s share price has been declining throughout the week. On the 26th, the day after the acquisition was confirmed, Tesla stock fell 12.18%, the largest in 19 months, and closed at $876.42.
As there is still $17 billion left of Musk’s pledged equity capital, the possibility of an additional sale of Tesla’s stake is being discussed. CNN Business reported that “it is not unlikely that Musk may have sold shares that have not yet been made public.” This means that it sold more than the 4.4 million shares it announced it had sold on that day and has not yet reported it to the SEC. Musk’s stake in Tesla was about 172 million, or 17% of the total. But Musk tweeted on the same day that “there will be no further sales of Tesla stock after today.”
According to the Bloomberg Billionaires Index, Musk has a net worth of $252 billion, making him the richest man in the world. But most of his fortune is tied to Tesla and the space exploration company SpaceX. It may be difficult to sell additional stakes as a significant portion of the Twitter acquisition will be financed by equity-backed loans. Occasionally Musk has described himself as “cash poor”, and some say he may struggle to finance the acquisition.
As a result, there is also a forecast that Musk will sell its cryptocurrency to fund the remaining acquisition. Musk said in July of last year that he owns Bitcoin, Ethereum and Dogecoin, but did not disclose how much he owns. Another option is to raise co-investors. “My intention is to have as many shareholders as the law allows,” Musk said at a TED conference earlier in the deal.
It was also reported that Musk had announced plans to lay off employees to improve Twitter’s profitability, even though it had not raised the full amount of the acquisition. According to Bloomberg, citing multiple sources, Musk mentioned the layoffs in phone calls with banks that would provide loans before the deal was announced. Twitter CEO Farag Agrawal has told employees that the company will remain in business until the deal is finalized, but it suggests that there may be a restructuring in the future to cut costs. An unnamed official told the news agency that Musk did not disclose plans to Twitter board members, including layoffs.
Jang Soo-hyun reporter jangsue@hankookilbo.com
