Elon Musk updates Twitter funding plan; Stocks jump
Tesla CEO Elon Musk has modified his financing plan for his proposed $44 billion purchase of Twitter.
According to a regulatory statement, the review will cut $6.25 billion from the lending package that Musk had previously lined up to buy Twitter.
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This means that Musk will need to increase this amount in equity obligations rather than debt. This brings the capital share of the deal to $33.5 billion, up from $27.25 billion disclosed three weeks ago.
The move raised investor hopes that Musk still intended to cut the deal amid concerns about the number of fake accounts on Twitter.
Twitter shares jumped 5.5% to $39.22 in after-market trading, based on a 3.9% rise in regular trading.
The announcement came Wednesday on the same day that Twitter held its annual shareholder meeting.
Shareholders did not directly address Musk’s deal — that vote will be scheduled at a future date yet to be determined, should the deal go ahead.
Twitter CEO Parag Agrawal declined to provide an update on Musk’s offer status, citing “regulatory and other reasons.”
The filing with the Securities and Exchange Commission did not go into much detail about where Musk would receive the additional equity, but confirmed that he was still trying to persuade his friend and former Twitter CEO Jack Dorsey to dump his shares in the financing package.
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Dorsey, who is also a co-founder of Twitter, owns a 2.4% stake, which is currently worth about $700 million, based on the company’s closing share price on Wednesday, according to FactSet Research. Musk owns approximately 9.6% of the stock, valued at $2.7 billion.
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Wednesday was also Dorsey’s last day as a member of Twitter’s board of directors, the date set when he resigned as CEO last November.
The Associated Press contributed to this report.