Musk gets $7B backing for Twitter bid from tech heavyweights

(AP)

Billionaire Elon Musk has strengthened the equity stake of his offer to buy Twitter with commitments of more than $7 billion from a range of investors, including Silicon Valley heavy hitters like Oracle co-founder Larry Ellison.

The Thursday filing also said that Musk is in ongoing talks with other parties including former Twitter CEO Jack Dorsey, who is the second largest individual stakeholder in the company after Musk.

Other investors include Sequoia Capital Fund, which pledged $800 million, and VyCapital, which promised $700 million, according to a Thursday filing with the U.S. Securities and Exchange Commission. But Ellison, who is also a Tesla board member, is making the biggest contribution, pegged at $1 billion.

Technology venture capitalist Ben Horowitz said his firm, known as Andreessen Horowitz or a16z, is investing $400 million because it believes in Musk’s “brilliance to finally make it what it was meant to be.”

“While Twitter has great promise as a public square, it suffers from a myriad of difficult issues ranging from bots to abuse to censorship,” Horowitz tweeted Thursday. “Being a public company solely reliant on an advertising business model exacerbates all of these.”

Saudi Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud has pledged 35 million in Twitter shares in support of Musk, according to the filing.

Musk in earlier regulatory filings revealed that he has sold roughly $8.5 billion worth of shares in Tesla to help fund the purchase. Musk later tweeted that he doesn’t plan any further sales of the company’s shares, meaning he would need outside commitments to help fund the $44 billion deal.

Because of the new funding listed in the SEC filing Thursday, Musk will cut the $12.5 billion in margin loans against his Tesla shares in half, to $6.25 billion. The transaction is also now being funded by $27.25 billion in cash and equities, up from $21 billion.

Shares of Twitter Inc. have remained below the per-share offering bid by Musk of $54.20 because there are still doubts on Wall Street about whether the deal will go through.

The new round of funding pushed the price of Tesla shares closer to what Musk is paying, with the stock jumping almost 4% at the opening bell, to $50.85.

“In this game of high stakes poker, the Ellison and impressive list of backers will remove more of an overhang from Tesla shares as the Musk leverage of shares now becomes less onerous,” wrote analyst Dan Ives who follows Twitter for Wedbush. “This was a smart financial and strategic move by Musk that will be well received across the board and also shows the Twitter deal is now on a glide path to get done by the end.”

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