represents about one-sixth of his $US250.6 billion fortune. Yet the vast majority of that wealth is tied to his stake in Tesla, the electric carmaker he co-founded that has surged in value over the past two years and lifted him to the top of the Bloomberg Billionaires Index.
For Musk to raise the additional $US36 billion in cash needed to buy the rest of Twitter would require selling about 36.5 million Tesla shares, or more than a fifth of his stake. Such an exit could risk a slide in the company’s share price -- not to mention potentially raise questions about the commitment, financial and otherwise, of its chief executive officer.His other option is to borrow against his positions in Tesla and space exploration company SpaceX.
Twitter shares fell 1.7 per cent Thursday in New York, closing at $US45.08. Musk offered $US54.20 per share in cash. Tesla shares declined 3.7 per cent.Musk had 52 per cent of his Tesla shares pledged as of June 30, according to the company’s most recent proxy filing. The maximum that can be borrowed against pledged shares is 25 per cent of their value, according to a Tesla policy.
Musk said at a TED event in Vancouver on Thursday that he may seek to keep as many as 2000 existing Twitter investors, reducing the cash he’d need to take it private.“The intent is to retain as many shareholders as is allowed by the law,” he said, adding that he “could technically afford” the full purchase price.
No matter how he goes about it, buying all of Twitter would be a stark shakeup of Musk’s empire. His purchase of a 9.1 per cent stake, first disclosed last week, marked his first significant diversification outside of Tesla and SpaceX.
DevPend LamoneyTom Vanguard now owns 10.3% of Twitter, making it a bigger shareholder than Elon Musk. That might change the dynamics. [The Vanguard Group, Inc. US Pennsylvania, with about $7 trillion in global assets under management]