Elon Musk, the chief executive of electric vehicle maker Tesla, has sold about $7 billion worth of company stock, a move he said on Twitter was an effort to raise cash in case he was forced to close its $44 billion deal to acquire Twitter.
The sale of 7.92 million Tesla shares began on Friday, Musk disclosed in securities filings on Tuesday, a reversal of his previous statements that he would not sell additional shares to fund the Twitter deal.
Mr Musk signed the deal in April to acquire the social media company only to announce months later his intention to pull out, citing concerns over his accounting for fake users. His hesitation coincided with a deep drop in shares of tech companies, including Tesla, the main source of his wealth.
Twitter sued Mr Musk to force him into the deal through a contract provision known as “specific performance”. A Delaware Chancery Court judge will decide in October whether to proceed with the acquisition.
In a tweet on Tuesday, Musk said he sold the shares because, in the “event (hopefully unlikely) that Twitter forces this deal *and* certain financial partners don’t materialize, it is important to avoid a fire sale of Tesla shares.Mr Musk is the richest man in the world, but much of his wealth is tied to Tesla shares.He also said on Tuesday that he would buy more Tesla Stock if its deal to buy Twitter has not been completed.
In April, Mr Musk sold around $8.5 billion worth of Tesla stock to help fund the deal, before tweeting that he had no further sales planned.
Shares of Twitter rose 2.8% in early trading, although they were still well below the $54.20 per share that Mr. Musk offered the company. Tesla shares rose less than 1%.
In addition to about $13 billion in debt financing, Mr. Musk said in May that he would pay for the Twitter acquisition with about $33.5 billion in cash, using a combination of his own funds, outside investors and a partnership with other Twitter shareholders. He had already signed a list of Silicon Valley heavyweights – including venture capitalist Andreessen Horowitz and tech mogul Larry Ellison – to commit around $7.1 billion to the deal. Other backers include cryptocurrency companies, family offices, sovereign wealth funds, real estate companies, and mutual fund companies.
Many of those backing Mr Musk’s bid have been subpoenaed by Twitter in increasingly bitter legal proceedings.
Mr Musk questioned how Twitter counts its number of fake users. Twitter has defended its process, which it says includes proprietary and confidential information.
For the past several weeks, Twitter and Mr. Musk have argued over the details of the deal. Mr Musk unveiled his counterclaims last week against Twitter, accusing the company of committing “fraud” and forcing him into a sale. Twitter President Bret Taylor called his claims “factually inaccurate, legally insufficient and commercially irrelevant.”
At the same time, Mr. Musk appeared to take a more open tone about the possibility of getting the deal done. At Tesla’s Investor Day last week, he spoke about the changes he would make to Twitter if he ran it.
On Saturday, he tweeted, “If Twitter just provides its method of sampling 100 accounts and how they are confirmed to be real, the deal should continue on the original terms.”
Still, Mr. Musk seems determined to keep the doors open. In response to a question on Twitter about whether he would start his own social platform if the deal didn’t go through, he replied, “X.com.” Mr. Musk, who has an affinity for the letter X, spoke of a desire to create a competing service. Twitter cited this possibility as a reason for resisting its demands for confidential information about how it counts fake users.
Many legal analysts said Twitter’s argument was stronger than Mr. Musk’s, but they wondered if a judge would be willing to order him to go through with the deal, with the risk that he might not give. suite, given Mr. Musk’s habit of flouting the law. limits.
Its sale of Tesla stock could alleviate those concerns, said Ann M. Lipton, professor of corporate governance at Tulane Law School.
“The sales clearly show that he intends to honor court orders,” she said.