Elon Musk: Saudis in talks to take Tesla private

Randal Sanchez
August 13, 2018

Tesla Inc and Chief Executive Elon Musk were sued twice on Friday by investors who said they fraudulently engineered a scheme to squeeze short-sellers, including through Musk's proposal to take the electric auto company private.

The founder of the electric auto maker also indicated that he would need to raise about $23bn, not the $70bn that had been reported.

In a blog post, Musk said the Saudi fund had been pushing to take the electric carmaker private in talks dating back almost two years and also backed the deal last week.

The Financial Times reported last week that Saudi Arabia's sovereign wealth fund - overseen by Saudi Crown Prince Mohammed bin Salman - built up a 3 percent to 5 percent stake in Tesla.

"The question is still around Tesla's future sales".

Musk owns 20 percent of Tesla Motors. At least two investors have sued Musk and Tesla alleging share-price manipulation.

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SoftBank isn't planning to participate as a potential source of capital in a deal taking Tesla private, according to people with knowledge of that matter who asked not to be identified as the details aren't public. Musk wrote that since August 7, the fund's managing director has expressed support subject to due diligence. That's why he tweeted on August 7 that the funding had been secured, Musk wrote.

"When you have these grand-vision companies, the founders - these leaders - don't want to have some investors have control", Gene Munster, a managing partner at venture capital firm Loup Ventures said in a Bloomberg TV interview, talking about the idea that Musk wouldn't want to bring in any large new shareholders. "At this stage, it is hard for Tesla to convince the general investors that delivery will ramp up quickly". "I understood from him that no other decision makers were needed and that they were eager to proceed", Musk wrote in the blog.

Musk closed out the post by stating: "I will now continue to talk with investors, and I have engaged advisors to investigate a range of potential structures and options".

In one of the two lawsuits, which was filed in federal court in San Francisco by Kalman Issacs, the plaintiff contends Tesla and Musk "embarked on a scheme and course of conduct to artificially manipulate the price of Tesla stock to completely decimate the company's short-sellers".

What are the next steps? Among other things, this will allow me to obtain a more precise understanding of how many of Tesla's existing public shareholders would remain shareholders if we became private.

"I made the announcement last Tuesday because I felt it was the right and fair thing to do so that all investors had the same information at the same time", Musk said.

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