On Monday, Elon Musk made a deal that allowed a company owned by him to purchase Twitter for $44 billion, which would make Twitter a company privately held by Musk. This acquisition comes after Musk earlier offered to buy Twitter shares for $54.20 per share, which would amount to $43 billion dollars in total. Musk financed the deal in several ways, including the use of his own wealth, which primarily comes from his ownership of Tesla stocks. Because of that, Musk sold four billion dollars worth of Tesla shares on Thursday. But in order to get the rest of the money he needs to buy Twitter, he borrowed money from banks in order to do it and used Tesla shares as collateral. Specifically, he is now around $25.5 billion in debt with several major firms, including Bank of America and Morgan Stanley, while he has committed $21 billion in equity financing. Equity financing is when someone sells shares in order to raise money for something else, like in this case, in order to raise money to buy Twitter.
Musk claims to have made the move in order to protect free speech, get rid of bots and make Twitter’s algorithm open-source, meaning that people would be able to see how the code works, which has raised its own concerns. However, that has not stopped many people, including many Twitter users, from being concerned about the state of affairs. Current Twitter users fear that moderation will decrease and lead to an increase in harassment on the platform, while others, including the Biden Administration, worry about what that will mean for the Twitter ban of former president Donald Trump, mainly regarding whether he will be allowed back on the platform. However, only time will tell what happens to the deal, as it has not closed yet. Mainly, Musk could still change his mind, as he has with other promises, such as Tesla selling fully self-driving Tesla cars and most relevant, to privatize Tesla. Twitter could still pull out of the deal as well, with a penalty for Twitter pulling set at $1 billion, which is low compared to how much Musk is paying for the company. Finally, if the deal does not close by Oct. 24, 2022, the deal will not go through.
