Musk Says He Has the Means to Buy Twitter, but Investors Aren’t So Sure

People who try to take over companies often go to great lengths to show they have the money to do it. Not Musk.

Mr. Musk said that the deal was contingent on completion of anticipated financing, but he provided no clues about how he would raise the funds to buy the roughly 90.

Howard Berkenblit is the head of the capital markets team at Sullivan & Worcester.

On Thursday, the board seemed to be leaning against a deal. A poison pill is a defensive corporate maneuver intended to ward off an unwanted takeover offer by making the target's shares more expensive.

The shareholders didn't think Mr. Musk would be able to cobble together a bid. The shares of a takeover target typically rise, but the stock of the company fell below Mr. Musk's offer.

Mr. Musk said at the conference that he had enough assets to pull off the acquisition.

Mr. Musk said in an earlier filing that he would "unlock" it.

The board has to take into account Mr. Musk's volatile and unpredictable nature when making a decision, said Drew Pascarella, a senior lecturer of finance at Cornell University.

Mr. Pascarella said that a personality conflict does not disqualify an offer.

The richest person in the world is Mr. Musk with a net worth of $200 billion. His wealth is mostly tied up in the stock of the company. As of December, Mr. Musk owned about 20% of the electric car company. Mr. Musk already has pledged a portion of his shares for other loans, according to company filings.

He could potentially pledge the rest of his eligible shares to raise enough money to buy the company. It would be hard for banks to lend to Mr. Musk against his holdings if the stock was as volatile as it is.

The bid requires up to 20 billion dollars in debt financing and Mr. Musk could go to banks to help. Morgan Stanley, the investment bank that is advising Mr. Musk, is not known on Wall Street for large-scale financing.

Morgan Stanley could look at banks with bigger balance sheets. There is a chance that the bank will sit it out because of a tense relationship with Mr. Musk. Last year, Mr. Musk was sued by JP Morgan over a false claim that he had secured funding for his plan to take the company private.

The company declined to comment.

Private equity is a third option for Mr. Musk. He brought in Silver Lake, a technology-focused private equity firm, when he contemplated taking the company private. Silver Lake has a connection to social media. The co-chief executive of the firm joined the board of the company in 2020.

There is a catch there as well. Silver Lake signed an agreement that severely limits its ability to acquire more than 5 percent of the company. That agreement could make it difficult for it to team up with Mr. Musk.

Silver Lake didn't comment.

Private equity firms could team up with Mr. Musk, but it would be difficult. Private equity firms look for companies with steady cash flow so they can safely take out large sums of debt, which can be paid back with the company's cash flow. It isn't a candidate for the kind of cost-cutting that private equity firms typically employ because of its negative cash flow last year.

Potential partners would have to take into account the possibility that Mr. Musk could draw the ire of regulators. Even if the financing came together, that could reduce the likelihood of a deal.

Mr. Musk failed to disclose his stake in the company in a timely manner, denying shareholders the chance to benefit from the price gain when he eventually disclosed his stake.

The Securities and Exchange Commission is likely to scrutinize Mr. Musk's moves. If it pursues a case, it could deter banks, private equity firms and shareholders from embracing his offer.