The Dumbest Buyout

Elon Musk - The world’s richest man has allegedly hired the investment bank Morgan Stanley and is trying to gather financing, so he can buy Twitter for $43 billion.

According to The New York Times, Musk is evaluating various packages of debt and a loan against his shares of Tesla. Apollo Global Management, an alternative asset manager, is among the parties considering offering debt financing. The equity he needs is likely to be sizable.

Last week, Elon Musk, made an unsolicited offer for the social media company, saying that he wanted to take it private and that he wanted people to be able to speak more freely on the service. But his offer was regarded skeptically by Wall Street because he did not include details about how he would come up with the money for the deal. It is unclear if Elon Musk’s cash raising efforts will be successful.

While Twitter’s board has not rejected Mr. Musk’s offer, it responded days later with a defensive tactic known as a “poison pill.” A poison pill would effectively prevent Mr. Musk from owning more than 15 percent of Twitter’s shares. Musk has been building his stake in Twitter since January and owns more than 9 percent of the company, making him at one point its single-biggest individual shareholder.

In today's video we look at how serious his bid is, the likelihood that he will succeed in buying Twitter, How the financing might work, and how poison pills work in blocking corporate raiders.


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