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Where does the money of 21 billion to buy Elon Musk’s Twitter come from?

Billionaire’s offer to buy Twitter Elon Musk required him to cover the equity portion of $21 billion from personal funds. So where did Musk ‘dig’ this money?

On April 25, technology billionaire Elon Musk and Twitter company reached an agreement for Musk to buy back the platform social network for nearly $44 billion.

Presenting details of the deal, including a loan scheme from banks, large financial institutions, or even out of pocket, Musk convinced Twitter shareholders to let the company “sell itself”. ” for him.

However, another question is raised about where the $ 21 billion that Elon Musk pledged comes from.

During the trading session on April 25 in New York (USA), stock price Twitter’s closed at $51.7/CP, lower than the $54.2/CP offer Musk had suggested earlier. On April 26, Twitter’s stock price dropped another 2%, down to only $50.64/share. According to Bloombergthe agreement between Twitter and Elon Musk includes a provision that Musk will have to pay a “reverse parting” fee (to make up for the shortfall in shares from the proposed $54.2/share price). if the deal falls through.

Where does the money of 21 billion to buy Elon Musk's Twitter come from?  - 1 . photo

Under the agreement, Musk must spend $ 21 billion from his personal pocket to contribute to the outright purchase of Twitter

reuters

Although rated as the richest person world At the moment with a net worth of $ 257 billion, Elon Musk still faces certain financial pressures and $ 21 billion is an unimaginable number when estimates say that Musk only has about 3 billion USD. billions of dollars in cash and liquid assets. That means Musk will have to follow one of the following options:

Enlist other investors

One avenue for Musk is to find like-minded investors who are willing to put their faith in his Twitter vision. Investors here can include both old and new shareholders.

This strategy was mentioned by Musk at the TED 2022 event, that he would “retain as many shareholders as possible, as long as it is required by law”.

US law limits the number of shareholders in private companies to 2,000, which means that some small investors will not be able to continue to hold shares of Twitter after the historic transaction. Meanwhile, major shareholders like Twitter founder Jack Dorsey will likely retain shares if they believe in Musk’s vision. Currently, Dorsey shares are worth 1 million USD.

April 25th, Bloomberg said Musk is trying to negotiate with other potential investors, besides retaining old shareholders. On the other hand, at TED 2022, Musk once declared “not interested in economic benefits” from Twitter and this has made many potential investors think more cautiously.

Sell ​​off Tesla shares

If it fails to attract investors, Elon Musk still has enough financial capacity to fulfill his commitment thanks to his stake in Tesla.

Despite taking a partial pledge to cover a $12.5 billion margin loan, Musk still owns unmarried shares in Tesla that are worth about $21.6 billion, based on April 25 closing prices in Tesla. New York. If you sell the remaining shares, including taxes, the proceeds can still help Musk handle the other case.

Where does the money of 21 billion to buy Elon Musk's Twitter come from?  - 2 . photo

Selling off the remaining shares in Tesla could help Musk pay $ 21 billion

reuters

However, this strategy is considered to come with its own risks. First of all, concerns about Musk’s stock sale have caused Tesla’s stock price to drop about 8% since early April. If Musk decides to sell, Tesla’s stock price could fall dramatically.

Next TeslaElon Musk also owns two other private companies: SpaceX and The Boring Company. However, the possibility of Musk selling shares of these two companies is very low because they are much less liquid.

Musk’s “underground” wealth can exceed all estimates

Another possibility is that Musk is even richer than all estimates of The Forbes nice Bloomberg, when all of these statistics are based on public stock values ​​and related reports. In other words, Musk’s hidden assets and investments may be enough for him to pay $21 billion without depending on any outside resources.

In addition, Elon Musk is also a famous “player” in the field of cryptocurrency. In July 2021, Musk once revealed that he owned Bitcoin, Ether and Doge (Dogecoin), but did not disclose how much and when. The first two coins alone have increased by about 720% and 2.60% respectively compared to March 2020. Doge has increased by 30% on the same day that the Elon Musk and Twitter deal was reached.

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