Elon Musk has taken advantage of a recent rebound in Tesla’s stock price to sell $6.9 billion (€6.8bn) worth of shares in the electric carmaker since the end of last week, according to a series of regulatory filings late on Tuesday.
The sales are the first since the Tesla and SpaceX chief executive sold $8.5 billion of stock in April, shortly after he agreed a $44 billion deal to buy Twitter, and add to his cash reserves as he faces the social media company’s demands to go through with the purchase.
Concerns that Musk would be forced to liquidate a significant part of his Tesla stake in a falling market have hung over the electric carmaker’s stock price in the weeks following the offer for Twitter, and were only eased after he announced he was scrapping the bid in early July.
Twitter has sued Musk to force him to go through with the deal, and a Delaware court is due to hear the case in early October. Musk has claimed that he can abandon the deal because Twitter misstated how much of the traffic on its network comes from bots, while the company has insisted that its regulatory disclosures were complete.
The sales disclosed on Tuesday were at an average price of $869, well above the low of $620 that Tesla’s shares hit in May.
Responding to a tweet asking if he was “done selling”, Musk said “yes”, and added: “In the [hopefully unlikely] event that Twitter forces this deal to close and some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock.”
Musk first embarked on significant stock sales late last year, with a large part of the proceeds from stock option exercises being paid in tax. At the time he polled his followers on Twitter about whether they wanted him to sell part of his stock and pay tax, before going on to sell about $16.5 billion worth of shares.
Under the terms of his Twitter offer Musk is personally responsible for financing up to $33.5 billion of the acquisition, with the rest coming from debt, though he has announced commitments from other investors of more than $7 billion.
The Twitter agreement provides for a $1 billion break-up fee. But it also requires “specific performance”, meaning that Musk must go ahead with the purchase unless he can prove that he was misled or a “material adverse event” has occurred at Twitter. He could also walk away if the debt needed to close the deal is no longer available.
That has raised the stakes ahead of the October court hearing, leaving Musk at risk of being ordered to go ahead with the deal on its original terms or forced to try to reach an out-of-court settlement with Twitter.
– Copyright The Financial Times Limited 2022
