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Dear Twitter (TWTR) Stock Fans, Mark Your Calendars for Oct. 24

Twitter (NYSE:TWTR) and TWTR stock are once again in the spotlight after an 8-K filing revealed further details about Elon Musk’s acquisition of the company. Last week, Musk registered three companies in Delaware to aid in the acquisition. X Holdings I, the first company, will become Twitter’s parent company if the acquisition completes. Furthermore, X Holdings II would merge with Twitter in the event of an acquisition. Finally, X Holdings III would be used to fund the acquisition.

Twitter (TWTR) logo displayed on a smartphone screen with a hand ready to use the app
Source: shutterstock.com/khak

The 8-K filing revealed Oct. 24 as the deadline for the transaction. Here’s what you need to know about TWTR stock moving forward.

TWTR Stock: October 24 Set as Transaction Deadline

By October 24, Musk plans on merging Twitter with X Holdings I and X Holdings II. The filing also states that the deadline may be extended for six months under certain circumstances related to antitrust laws and other governmental actions.

However, the acquisition could still unravel before then. It is still pending shareholder approval, as well as regulatory approval.

In addition, Musk’s acquisition of Twitter includes a hefty breakup fee under certain circumstances. For example, if he is unable to secure financing to satisfy the deal, Musk will have to pay Twitter $1 billion. On the other hand, if Twitter accepts a proposal from another suitor, it would have to pay Musk $1 billion.

Where Will Musk Get the Money to Satisfy the Twitter Deal?

Meanwhile, investors are wondering where Musk will get the cash to satisfy the transaction. Musk has stated that he willing to put up $21 billion of his own capital.

According to Bloomberg, Musk is the richest person in the world with a net worth of $257 billion. However, most of that money is tied up in investments with companies such as Tesla (NASDAQ:TSLA) and SpaceX. As a result, Bloomberg estimates that Musk’s liquid net worth is about $3 billion. Still, the Tesla CEO has a few options under his belt.

First, Musk could seek out current or new shareholders to help pay the $21 billion bill. These shareholders could be in the form of private equity firms, such as Thoma Bravo or Elliot Management.

Musk has pledged TSLA stock as collateral for his $12.5 billion margin loan. After accounting for collateral for the margin loan, he still has $21.6 billion in unpledged TSLA stock. As a result, Musk is free to use his unpledged Tesla position to satisfy the acquisition. Yesterday, Tesla plunged over 10% as investors realized that Musk may choose to do this.

Finally, Musk owns an undisclosed amount of cryptocurrencies, such as Bitcoin (BTC-USD) and Dogecoin (DOGE-USD). These are liquid assets, so he can choose to sell them at his will.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/dear-twitter-twtr-stock-fans-mark-your-calendars-for-oct-24/.

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