Elon Musk Establishes X Holdings Companies

Elon Musk Establishes X Holdings Companies

Elon Musk has created an X holdings company. This is multiple companies: X Holdings I, X Holdings II, and X Holdings III. These are umbrella companies that are a representation of a basket of companies. How does this affect Tesla and Elon's bid for Twitter?

There is a 13D filing done by Elon Musk, which is used to update on investor activity. Elon did one of these filings to show his $54.20 per share purchase bid for Twitter. Elon is currently a 9% equity holder of Twitter. We also know that Twitter has not responded to Elon's bid to buy it. Elon said that this was his best and final offer.

Elon is now looking to do a tender offer, which is going to all shareholders of a company and saying he will buy their shares for a specified amount. Elon is also looking to secure funding from other sources, likely private equity, to help fund the purchase of Twitter.

The amount of money needed to buy Twitter will not all come from Elon Musk. Around $13 billion of the purchase price would come from various entities, like Morgan Stanley, and a $12.5 billion amount representing a margin loan against Elon Musk's shares of Tesla stock.

X Holdings Companies

The third piece is an equity commitment for the remaining $21 billion needed to buy Twitter. This is where the X Holdings companies come in. There is 3 of them and Elon Musk is listed in an equity letter as the primary investor.

Elon Musk does not have $21 billion to add to the pool of money to buy Twitter. How would he get this money? Would he sell Tesla stock? I don't think he would do that. I think the X Holdings companies are being created to form companies that can be valued and invested in, allowing for investors to invest in them, and that Elon's ultimate plan is to own 51% of Twitter. Elon's X Holdings companies, with other investors, would also own a portion of Twitter as well.

I don't think there is any concern for Elon Musk to sell his Tesla stock then. If Twitter can get put under an X Holdings company, and other investors can pool their money in that X Holdings company, then that allows for additional cash to be invested and solves the problem of coming up with the final $21 billion.

Either way, I think Elon Musk is not going to easily give up on his bid to buy Twitter. He is a huge proponent of free speech and I'm looking forward to seeing if this approach to buying Twitter works and what the future of these X Holdings companies ends up being.

Will Elon Musk move all his companies under this X holdings company? Would this be a good idea to do?

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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.

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