Elon Sees the Brink

Media Mondays, Substack Woes, CNN’s Zuckeritis

Happy Memorial Day from all of us here at Puck, and thanks as always for reading the Daily Courant.

Here’s what’s new in our world.First up, William D. Cohan explores Elon Musk’s new layaway plan for Twitter—how it insulates Tesla, what it means for Jack Dorsey, and why the private equity guys aren’t going to like it.

Plus, on a special episode of The Powers That Be, Jon Kelly joins Peter Hamby to discuss the lingering anxieties inside CNN over the loss of Jeff Zucker, how the newsroom lost the plot on the Uvalde shooting, and why Substack ditched its plans for a Series C.

Elon’s Razor

The simplest explanation for Elon’s recent moves is that he still intends to buy Twitter. But his new financing plan, restructured to protect Tesla, will require friends to share the risk. And with a purchase price this high, and leverage so low, who else would want it, anyway?

WILLIAM D. COHAN

The most important thing to understand about Elon Musk’s public dickering over whether he will buy Twitter at $54.20 a share is that Elon has already signed a merger agreement committing him to buy Twitter for $54.20 a share. It’s a legally binding agreement and the Twitter board has said it intends to enforce it—M&A code for don’t mess with the deal unless you want a legal fight. Elon has a few ways to renege, of course, but not many. He can find “something” during his due diligence of Twitter that constitutes a reason for him to abandon the deal. But I don’t see what that could be, and it’s certainly not an abundance of “bots.” Obviously, if he can’t come up with the money he has committed to the $44 billion deal, then he would have an out, and then he could presumably pay his $1 billion break-up fee and walk away.

But from all appearances, Elon is indeed still working hard to get his financing in order. Earlier this week, he revised his plan in a regulatory filing, eliminating his $6.5 billion of margin loans (secured by Tesla stock, down from what was once a $12.5 billion margin loan) and thus raising his equity commitment to an astounding $33.5 billion. That should be a relief for Tesla shareholders, who would have been exposed to a potential share price death spiral, were Elon called upon by his bankers to unload his Tesla stock. The big question now is whether he can actually raise that much equity. If he can, then Elon will own Twitter. If he can’t or decides he doesn’t want to, he won’t own Twitter.

So here’s where things stand. Of the $33.5 billion he needs, Elon has announced that he has commitments for $7.1 billion from an eclectic group of 18 friends and investors—Larry Ellison, Alexander Tamas, Changpeng Zhao, the Witkoff family, and so on. He’s also announced that Prince Alwaleed, in Saudi Arabia, has agreed to roll over his stake in Twitter into Elon’s Twitter, a total of $2 billion (at $54.20). Elon also won’t have to buy the $4 billion of Twitter shares that he already owns (at $54.20). Taken together then, Elon can account for $13.1 billion of the $33.5 billion of equity he has pledged to raise. That leaves him with an equity hole of $20.4 billion...

CONTINUE READING ONLINE

FOUR STORIES WE'RE TALKING ABOUT

CNN’s Zuckeritis

Jon Kelly joins Peter for a discussion about lingering anxieties inside the CNN newsroom.

PETER HAMBY

NBCU-EA Postmortem

Notes on why NBCU-EA didn’t happen, thoughts on Warren & Shari, and Zaz’s next moves.

DYLAN BYERS & WILLIAM D. COHAN

McConnell's Gauntlet

The octogenarian minority leader has seen it all—and he’s in for the election season ride of his career.

TARA PALMERI

The Stranger Savior

Stranger Things returns after a three-year hiatus, offering Netflix the chance to change its troubled narrative.

JULIA ALEXANDER

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