White House Mulls Legal Basis To Review The Deal

While Elon Musk is busy making radical changes to his newest acquisition, the US government is looking into the legal basis of reviewing the Twitter (NYSE: TWTR) buyout deal pertaining to the ramifications of the foreign investors in the deal.

According to people familiar with the discussions who told The Washington Post, large foreign investors would have access to secret information about Twitter’s finances — and potentially its users — under the terms of Musk’s proposal to acquire the social media site.

This comes after Treasury Department officials were revealed to be investigating whether they have the legal jurisdiction to launch an investigation into the purchase because of Musk’s ties to foreign governments and investors.

Biden administration officials were earlier reported to be debating whether the US government should submit any of Elon Musk’s deals to national security investigations, including the purchase of Twitter with the help of a group of foreign investors.

A suggestion was floated to use the law governing the Committee on Foreign Investment in the United States to evaluate Musk’s transactions and businesses for national security implications. The interagency panel reviews acquisitions of US businesses by foreign buyers.

In financing the US$44-billion takeover, Musk paid slightly more than US$27 billion of his own cash in the acquisition.

Around US$5.2 billion comes from bank loans including from Morgan Stanley, Bank of America, Japanese banks Mitsubishi UFJ Financial Group and Mizuho, Barclays and the French banks Societe Generale and BNP Paribas. Morgan Stanley alone has contributed US$3.5 billion.

These loans are guaranteed by Twitter, and it is the firm, not Musk himself, which will carry the financial burden to pay them back.

But the other part of the financing involves US$5.2 billion from investment organizations and other significant entities, including US$1 billion from Larry Ellison, co-founder of software company Oracle.

Other members of this consortium include foreign investors like Prince Alwaleed bin Talal of Saudi Arabia, Chinese native-run Binance Holdings Ltd. (which was revealed to have invested US$500 million in the deal), and Qatar’s sovereign wealth fund.

bin Talal tweeted a statement on behalf of Riyadh-based Kingdom Holding Company (KHC) affirming the rollover of KHC and the prince’s combined 34,948,975 shares to “the ‘New’ Twitter, led by [Musk].”

“KHC & PO are jointly the largest investor after Elon Musk,” wrote the prince, referring to himself as “PO.”

The Public Investment Fund of Saudi Arabia, led by Crown Prince Mohammed bin Salman, owns 16.9% of KHC.

Information for this briefing was found via The Washington Post, Al Jazeera, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.