Twitter CEO Elon Musk? | FinancialTimes

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This is an audio transcription of the FT press briefing podcast episode: Twitter CEO Elon Musk?

Jesse Smith
Hello from the Financial Times. Today is Tuesday, April 26, and it’s your FT News Briefing.

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Twitter’s board has agreed to sell the company to Elon Musk. The FT’s James Fontanella-Khan will explain what we know about the deal and what we don’t.

James Fontanella-Khan
Will the current management of Twitter stay in place? Nobody knows. Will Jack Dorsey return to lead the company? Nobody knows. Will he create a subscription model with the company?

Jesse Smith
And European officials are exploring a new way to increase pressure on Moscow. Moreover, Emmanuel Macron has another term to lead France, but his second term will be much more difficult. I’m Jess Smith, replacing Marc Filippino, and here’s the news you need to start your day.

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The EU is divided on whether to ban imports of Russian oil. They haven’t yet because their economies are so dependent on Russia for energy. But now officials are discussing a cap on what they will pay for Russian oil. This would affect the Kremlin’s revenues, but would not be a total blockade. It is one of many proposals on the table this week when EU ambassadors meet to discuss a sixth sanctions package against Russia.

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Tesla CEO may soon own Twitter. Yesterday, Twitter’s board accepted Elon Musk’s $44 billion bid for the social media site. It would be one of the biggest leveraged buyouts on record, and it comes after initial hesitation from Twitter’s board. He even devised a poison pill to limit Musk’s ability to buy more stock. Here’s the FT’s James Fontanella-Khan on what’s changed.

James Fontanella-Khan
What really changed everything happened a few days ago, when Musk, in fairness to what most people expected, managed to secure funding, which was $25.5 billion in debt and $21 billion in equity. And that forced Twitter’s board to take it seriously. And what I’ve also been told is that they got a ton of calls from shareholders after Musk kind of laid out his financial package, basically telling the board, you have to seriously engage with him. And basically, once the board felt that, you know, its shareholders wanted a deal, it got together very quickly.

Jesse Smith
OK, so now the board has agreed to a deal, what happens next?

James Fontanella-Khan
I mean, there are still a lot of question marks. It’s kind of like, we don’t know exactly how Musk is going to find $21 billion in capital. Will he sell part of his shares in Tesla? Will he liquidate some of his cryptocurrency? I mean, we still lack details. This could change once there is a new regulatory filing. I was also told that he would probably try to recruit a group of other high net worth individuals or institutional investors who would be more interested in participating in the deal with him. There is a lot of speculation that Jack Dorsey, the co-founder of Twitter and apparently a friend of Musk, at least on the social media platform, might be partnering with him in some way. . So there are still a lot of open questions.

Jesse Smith
And James, another question is, could there be an impact on Tesla shares if Musk were to sell the ones he used to fund this Twitter deal?

James Fontanella-Khan
We do not know it. So you expect him to because Musk said he was cash poor. So most of his wealth is tied to Tesla and part of it to SpaceX, his space travel company. So, yes, assuming he had to sell $21 billion worth of Tesla stock, that would impact his margin loan, which kind of funds part of the debt package. And so that could potentially trigger a margin call, which would then force him to kind of, you know, give away more shares. It’s not a typical leveraged buyout for the simple reason that, for example, we’ve never really had a single person make such a large transaction, a private take if you will. Does he then plan to convert some of the company’s debt once he owns it? It is very possible. It’s a common trick, let’s call it, done by private equity firms so that he can immediately squeeze the money out of the business and reduce his own leverage. We just don’t know at this point.

Jesse Smith
So what do you think regulators will do with this deal?

James Fontanella-Khan
The deal will therefore certainly have to be approved by regulators. Now, given that Musk is someone who doesn’t currently own a media or social media company, you wouldn’t expect antitrust regulators to push back against the deal. However, in this case, there has been a lot of resistance in Washington against the wealthy, especially the tech billionaires who are buying up other companies. So it may not be stuck in a US court, but you can see, especially on the Democratic side of the aisle, a lot of pushback on the deal. But on the other hand, you know, Republicans are very excited about Musk taking over. They see it as a victory against the, if you will liberal bias, at least that’s how a lot of people on the American right view Twitter. There are a lot of question marks, will former US President Donald Trump be reinstated on the app? I really think the biggest risk factor here is whether there is a problem with the equity portion of the funding for this deal. This means getting the real money, the 21 billion needed to complete the transaction.

Jesse Smith
James Fontanella-Khan is the FT’s US Corporate Finance and Transactions Editor.

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Emmanuel Macron has just won a second term as President of France. One of the biggest issues he faces is the rising cost of living, including gas prices. But he also wants to advance broader economic reforms, and balancing those two could be tricky. This is our Parisian correspondent Sarah White.

Sarah White
I was talking today to a few, you know, business leaders and bankers about the challenges for Macron, and many of them were saying they felt like he had a balancing act more complicated than five years ago because he had to deal with his business plans and his economic reform. So, for example, working on a pension overhaul, he has to reconcile that with some social tension and the feeling in France that people’s cost of living is going up, that energy prices are going up, and that’s a kind of social powder keg. And he also has to balance, you know, a lot of the plans he has in store for the next five years require a lot of spending. For example, he wants to make big investments in renewable energies. So all of this is going to cost money, and he has to balance all of these things with reforms that are also going to help state finances. So, you know, when you talk to business leaders, they seem extremely relieved that Macron won. They find it reassuring, you know, in terms of coordination at European level. And that means that, in theory, he will build on some of the business-friendly reforms he has put in place over the past five years. But they fear that he has a very complicated task to accomplish.

Jesse Smith
And Sarah, the other challenge is also whether he can get the support of parliament to carry out one of the programs, right?

Sarah White
Yeah so one thing that people including businesses are worrying about now is that OK he won the presidential election that’s the main thing but that’s not quite the end yet end of the story. So in two months, in June, we will have legislative elections in France. And for Macron to go through any of his reforms, he really does preferably need a majority in parliament. And it’s not done this time. I mean, some of his opponents, including Marine Le Pen or far-left politicians who did well in this election, have sworn revenge in June for this vote. So that adds a bit to a sense of uncertainty about whether, okay, he has that second term, but will he actually be able to push through these reforms?

Jesse Smith
It is the Paris correspondent of the FT, Sarah White.

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You can read more about all these stories on FT.com. This has been your daily press briefing on FT. Be sure to check back tomorrow for the latest trade news.

This transcript was generated automatically. If by any chance there is an error, please send the details for a correction to: [email protected]. We will do our best to make the change as soon as possible.

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