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Musk to lead Twitter temporarily after $44 billion takeover -source

Published 05/05/2022, 06:49 AM
Updated 05/05/2022, 01:22 PM
© Reuters. FILE PHOTO: Larry Ellison, Founder and former CEO of Oracle Inc. watches a training race from a motor boat ahead of the America's Cup World Series sailing competition on the Great Sound in Hamilton, Bermuda, October 16, 2015. REUTERS/Mike Segar
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By Nivedita Balu and Svea Herbst-Bayliss

(Reuters) -Elon Musk is expected to become Twitter (NYSE:TWTR)'s temporary CEO after closing his $44 billion takeover of the social-media firm, a person familiar with the matter said on Thursday, as the billionaire inches closer to securing funds for the deal.

Musk, the world's richest man, is also the CEO at Tesla (NASDAQ:TSLA) Inc and heads two other ventures, The Boring Company and SpaceX.

Tesla shares dropped 8% on Thursday, as investors fretted that Musk's involvement with Twitter could distract him from running the world's most valuable electric car maker.

Twitter shares, on the other hand, extended gains and were up about 4% at $50.89, closer to the deal price of $54.20, as investors bet that the new funding made the completion of the deal more likely.

Parag Agrawal, who was named Twitter's CEO in November, is expected to remain in his role until the sale of the company to Musk is completed. CNBC first reported on Thursday that Musk plans to become CEO of Twitter on an interim basis.

Earlier on Thursday, Musk listed a group of high-profile investors who are ready to provide funding of $7.14 billion for his Twitter bid, including Oracle (NYSE:ORCL)'s co-founder Larry Ellison and Sequoia Capital.

Click here for an interactive graphic: https://tmsnrt.rs/3FgDrQM

Saudi Arabian investor Prince Alwaleed bin Talal, who had said last month that the deal price was not sufficient for him to sell his shares, agreed to instead roll his $1.89 billion stake into the deal, a regulatory filing showed https://www.sec.gov/Archives/edgar/data/1418091/000110465922056055/tm2214608-1_sc13da.htm.

"Great to connect with you my "new" friend @elonmusk ... Kingdom Holding Company and I look forward to roll our ~$1.9 bn in the "new" Twitter," Alwaleed said in a tweet.

Musk increased his financing commitment to $27.25 billion, while reducing a margin loan from Morgan Stanley (NYSE:MS) to $6.25 billion. He has already secured commitments for $13 billion in loans against Twitter from banks.

Click here for an interactive graphic: https://tmsnrt.rs/3OZyRLu

The other investors include crypto firm Binance, New York-based real estate tycoon Steven Witkoff's firm and DFJ Growth IV Partners, which has investments in the Boring Company, SpaceX, SolarCity and Tesla.

"We hope to be able to play a role in bringing social media and web3 together and broadening the use and adoption of crypto and blockchain technology," Binance CEO Changpeng Zhao said.

Reuters reported on Monday that Musk was in talks with large investment firms and high-net-worth individuals about taking on more financing for his Twitter acquisition and tying up less of his wealth in the deal.

Musk will continue to hold talks with existing shareholders of Twitter, including the company's former chief Jack Dorsey, to contribute shares to the proposed acquisition, according to the filing.

Larry Ellison, a board member at Tesla and a self-described close friend of Musk, has committed $1 billion for the funding.

Musk, a self-proclaimed free speech absolutist who has advocated user-friendly tweaks to Twitter, such as an edit button and defeating "spam bots" that send overwhelming amounts of unwanted tweets, has previously said he would try to keep as many investors in Twitter as possible.

Investors have been fretting over whether Musk will complete the Twitter deal.

© Reuters. FILE PHOTO: Oracle's Executive Chairman of the Board and Chief Technology Officer Larry Ellison gestures while giving a demonstration during his keynote address at Oracle OpenWorld in San Francisco, California September 30, 2014. REUTERS/Robert Galbraith

In April, he decided at the last minute not to take up a seat on Twitter's board. In 2018, Musk tweeted that there was "funding secured" for a $72 billion deal to take Tesla private but did not move ahead with an offer.

Musk would have to pay a $1 billion termination fee to Twitter if he walked away, and the social media company could also sue him to complete the deal.

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