October 1, 2022

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Elon Musk sells $7 billion in Tesla stock for Twitter deal

Elon Musk sells $7 billion in Tesla stock for Twitter deal

Elon Musk, CEO of electric car maker Tesla, has sold $7 billion worth of company stock, a move he said on Twitter was an effort to raise money in the event he was forced to complete his $44 billion acquisition of Twitter. .

Sale of 7.92 million shares of Tesla stock began Friday, Mr. Musk revealed Tuesday in Securities Depositsa reversal of his earlier statements that he would not sell additional shares to fund the Twitter deal.

Mr. Musk signed the deal in April to acquire the social media-only company Announced months later His intent to withdraw, citing concerns about the fake users’ account. His reluctance coincided with a significant decline in shares of technology companies, including Tesla, the primary source of his wealth.

Twitter has lawsuit Mr. Musk to force him to close the deal through a clause in the contract known as “determined performance”. A judge in Delaware Chancery Court will decide in October whether he should pursue the acquisition.

In a tweet on Tuesday, Mr. Musk said he sold the shares because “in the event (which we hope is unlikely) that Twitter forces this deal to close *and* some of the equity partners aren’t coming in, it’s important to avoid an emergency sale of Tesla stock.” Mr. Musk is the richest man in the world, but much of his wealth is tied up in Tesla stock. On Tuesday, he also said he would buy more Tesla shares If you don’t close his deal to buy Twitter.

In addition to about $13 billion in debt financing, Mr. Musk said at mayo That he would pay for the Twitter acquisition of approximately $33.5 billion in cash, through a combination of his own money, outside investors and a partnership with other Twitter contributors. He’s already signed on to a list of Silicon Valley heavyweights — including venture capital firm Andreessen Horowitz and tech mogul Larry Ellison — to commit about $7.1 billion toward the deal. Other backers include crypto companies, family offices, sovereign wealth funds, real estate companies, and mutual fund companies.

Many of those who supported Mr. Musk’s offer were as well Twitter summoned increasingly Bitter courtroom proceedings.

Mr. Musk questioned the way Twitter counted the number of fake users. Twitter has defended its operation, which it says includes private and confidential information.

Over the past few weeks, both Twitter and Mr. Musk have been wrangling over the details of the deal. Mr. Musk unveiled his counterclaims last week against Twitter, accusing the company of committingForgeryand force him to sell. Twitter CEO Brett Taylor called his allegations “factually inaccurate, legally inadequate and commercially irrelevant.”

At the same time, Mr. Musk seemed to strike a more open tone toward the possibility of moving forward with the deal. At Tesla Investor Day last week, he talked about the changes he would make on Twitter if he turned it on.

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On Saturday, he tweeted: “If Twitter simply provided a method for sampling 100 accounts and how they were confirmed to be real, the deal should continue on the original terms.”

However, Mr. Musk appears intent on keeping the doors open. In response to a question on Twitter about whether he would create his own social platform if the deal didn’t close, “X.com” replied. Mr. Musk, Who has an affinity for the letter X, Talk about wanting to create a competitive service. Twitter cited this possibility as a reason to resist its demands for confidential information regarding how it accounted for fake users.

Many legal analysts said the argument for Twitter Stronger than Mr. Musk, But they questioned whether the judge would be willing to order him to close the deal, at the risk that he might not pursue it, given Mr Musk. Usually flouting legal restrictions.

Anne M. Lipton, professor of corporate governance at Tulane College of Law, said his sale of Tesla shares may ease those concerns.

“Sales make clear that he intends to honor court orders,” she said.