Elon Musk Twitter bid hints his ‘final’ price maybe not so final

Elon Musk has said his $54.20 per share offer for Twitter Inc. was his “best and final.” While that may prove true, he just signaled that he might go higher.

The billionaire announced in a filing on Thursday that he’d secured $46.5 billion in funding for a bid to buy the social media company. That includes $25.5 billion in debt financing supported by more than a dozen investment banks, as well as a $21 billion equity commitment from himself. 

That’s about $9 billion more than what the Tesla Inc. co-founder would need to acquire the 91% of Twitter he doesn’t already own, according to Bloomberg calculations, suggesting he’s giving himself room to increase the offer if it comes to that.

Excluding transactions costs, $46.5 billion equates to almost $64 a share, or 18% higher than Musk’s last offer. That’s closer to the $70 a share that Twitter traded at a year ago, and might be more attractive to the company’s board, which adopted a poison pill defense after receiving Musk’s initial unsolicited bid. 

The analysis assumes that the $21 billion equity commitment portion doesn’t include the contribution of Musk’s existing Twitter stake. If included, it would bring down the premium over $54.20 a share indicated by the funding commitment. 

The higher price would also be more appealing to Twitter’s investors if he moves ahead with a tender offer, said Bloomberg Intelligence analyst Mandeep Singh.

“You have to go a little higher than your M&A price” Singh said. “That’s what really drives the smaller shareholders to tender their shares.” 

Documents in Thursday’s securities filing support the idea that a higher offer has been contemplated. The margin lending agreement says that a higher acquisition price for Twitter isn’t a reason for the lenders to walk away from their commitment, unless it involves additional debt. 

The filing doesn’t explain where Musk would get the $21 billion in equity financing he’s committed. That’s more cash than he has at the moment, according to the Bloomberg Billionaires Index. Bloomberg earlier reported that he’s vetting potential investors interested in backing the equity component of the deal.