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Elon Musk has been more than news this week, after the purchase of the social network Twitter by the billionaire as sole owner was announced on Monday. Purchase you made for an amount of $44,000 millions of dollars.
Now the question many are probably asking is did Elon Musk take all that money out of his pocket and the answer is no, even the richest person in the world needs financial advice and bank loans for a millionaire purchase.
It has been known for weeks that Musk was looking for financing to make his purchase. What is known is that at least the 55% of Elon Musk’s takeover bid would be financed with loans and he would pay the rest out of his own pocket.
Elon Musk consulted different entities to support him in his purchase, including: Morgan Stanley, Bank Of America, Barclays, BNP Paribas, and Mizuho, among others.
The now owner of the blue bird network used his money in the amount of $21, millions of dollars. For the participating bankers, this was a sign of “commitment”.
“That’s an incredible sign, the check of 21. million dollars is one of the largest I have ever seen”, commented a banker.
Lending money and being Elon Musk’s advisor, for any bank means prestige, besides banks usually have between 1% and 3 % of the value of a merge operation like this. This percentage is distributed among all the banks involved . In this case, from a transaction of $29,000 millions of dollars remain between $ 440 and $1,300 million dollars.
The largest participation has been of two US banks, with 29.6% Morgan Stanley; 18. 8% Bank of America; other 20. 8% of the British entity Barclays ; 18.8% Japanese MUFG; followed by the participation of BNP Paribas, Muzuho and Societé Générale with 5.0%, 3.6% and 2.15 respectively. According to graphs provided by Bloomberg.
It should be noted that Morgan Stanley, one of the world’s largest financial companies, has already been working with Musk for more than 04 years. It was one of the four banks underwriting Tesla’s IPO in 2010.
A great move by Musk, who in just six days got $21,000 millions of dollars. For banks it is a good strategy to lend billions of dollars to companies, with the possibility of forming part of a big business.
However, we have to see what happens with Twitter, which is a company that lacks free cash flow and that also lost millions dollars last year. And there is the uncertainty if Musk will really keep advertisers away, as he has promised.
Until now, it is not known what the Tesla billionaire will do to improve finances on Twitter, we only know that it will cut budget and improve freedom of expression. Similarly, doing business with the richest person in the world can definitely be very beneficial.
Read more: Elon Musk and Twitter: the ambition and “superpower” of the businessman, which generates as much admiration as hate
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