What awaits Elon Musk when he buys Twitter

The social network hasn’t made any money for two years. It is neither the most popular nor the most profitable social network. But Elon Musk made it personal. He will buy Twitter whatever it costs… Since he received the agreement from Twitter’s board of directors, the billionaire has been touring banks and investors to finance his $44 billion takeover bid. On Thursday, May 5, he claimed to have secured 7.4 billion dollars from several of them, including Larry Ellison, the founder of Oracle, or the Saudi businessman, Al Walid Ben Talal.

Even for the richest man in the world, finding funds has not been easy. According to the document sent Thursday to the SEC, the policeman of the American stock market, Elon Musk should commit up to 21 billion of his personal fortune in the operation. In order to complete this sum, twelve banks, including BNP Paribas and Société Générale, agreed to grant him two separate loans for a total of 25.5 billion dollars. The contractor therefore has, to date, more than 46 billion dollars to finalize the takeover of Twitter.

One of his loans must still be granted to him by the Morgan Stanley bank, the architect of this financial arrangement, on the condition of committing part of his shares to Tesla. But by appealing to private investors, Elon Musk managed to lower the amount of this loan and reduce the risk of this operation for his personal fortune. A round table all the more important that this loan will weigh directly on the future of Twitter. It is the company, in fact, that will be asked to repay this loan at the margin of 6.5 billion dollars.

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The profitability challenge

For a company that hasn’t made a profit in recent years, the pill might be hard to swallow. Elon Musk’s takeover offer comes at a sensitive time for the social network, which employs more than 7,000 people in 35 offices around the world. Twitter has been going through a period of transition since the departure of its founder, Jack Dorsey, last November. His successor, Parag Agrawal, assured that he would remain in post until the end of the deal, which could take between four and six months, according to the New York Times.

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