Musk unveils $46.5 billion package to fund Twitter bid

Elon Musk has secured commitments for $46.5 billion (£35.5 billion) in funding to purchase Twitter.

In documents filed with the US Securities and Exchange Commission (SEC) on Thursday, Musk said he was also considering a tender offer to purchase all of Twitter's common stock for $54.20 per share in cash.

A tender offer is considered a hostile bid as it bypasses the company's board of directors and takes the offer straight to other shareholders. Musk could use a tender offer to try to persuade other shareholders to pledge their stock to him at a specific price on a specific date.

Musk might use this as leverage to compel the board to drop its 'poison pill' defence if enough shareholders agree. However, he has yet to take a final decision whether or not to do so.

The poison pill tactic could make a takeover bid prohibitively expensive. As part of the plan, other investors would be allowed to acquire more shares of Twitter's stock at a discount. As a result, the value of each individual share would be diluted amid concerns of an unwelcome hostile takeover.

'The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium,' the company said.

The SEC documents state that 'entities related to Musk' have received commitment letters committing to fund an aggregate of about $46.5 billion.

Musk will personally invest $21 billion in the acquisition deal, while Morgan Stanley and other banks have agreed to give another $13 billion in loans secured against Twitter itself.

Margin loans secured by Musk's Tesla stock would amount to another $12.5 billion.

In addition to Morgan Stanley, other engaged banks include Barclays, Bank of America, Mizuho Bank, Societie Generale, Mitsubishi UFJ Financial Group and BNP Paribas.

According to the SEC filing, Twitter has not replied to Musk's proposal.

The firm says its board of directors is committed to completing a 'thoughtful, comprehensive, and deliberate' review of the deal. It will decide the course of action it believes is in the best interest of the company and its shareholders.

Musk made a bid to purchase Twitter for $54.20 per share, or $43 billion, last week, but hasn't explained how he would fund the purchase until now.

Elon Musk is a regular Twitter user, with more than 80 million followers.

He insists that Twitter is harming democracy by not sticking to free speech ideals, and that it must be taken private in order to grow and become a free speech platform.

Musk argues that instead of relying on Twitter to curate content, users should be free to choose or create their own algorithms that would select the tweets they see.

He hinted at a number of changes he would make to Twitter before announcing his takeover offer, including adding an edit button to tweets and converting the company's San Francisco headquarters into a homeless shelter.

Last month, the Silicon Valley billionaire said he was seriously considering building a new social networking platform.