Elon Musk says Saudis back Tesla buyout

Andrew Cummings
August 13, 2018

Saudi Arabia's sovereign wealth fund has been pushing to take electric carmaker Tesla private in talks with Chief Executive Elon Musk dating back almost two years and also backed the deal last week, Musk said in a blog post on Monday.

Discussions over taking Tesla private have failed before.

In his blog Monday, Musk said that reports that more than $70 billion would be needed to take Tesla private "dramatically overstate the actual capital raise needed" because he expected some shareholders to remain invested in the firm. At least two investors have sued Musk and Tesla alleging share-price manipulation. Musk wrote that since August 7, the fund's managing director has expressed support subject to due diligence.

Saudi Arabia's Public Investment Fund (PIF) is a centerpiece of its initiative to modernize the kingdom's economy.

The PIF and Tesla didn't respond to requests for comment.

Such investors have always been an irritant for Musk, who has sometimes used Twitter to criticize them.

"They first met with me at the beginning of 2017 to express this interest because of the important need to diversify away from oil", Musk wrote. The board held a meeting (without Musk or his brother Kimbal, who is also a board member), and Musk said he would reach out to some of Tesla's biggest investors to further discuss the issue.

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". He said the Saudi fund approached him multiple times about going private starting nearly two years ago and that he left a July.

Despite tweeting on Tuesday that funding had been secured, Musk's newest blog post appears to contradict that claim.

Musk said that after discussions on the deal last week with both outside directors and the full board it had been agreed that the next step was for him to consult with major shareholders. The company had a market capitalisation of more than US$60b last week. Tesla's shares briefly turned negative on the news and traded up 0.8 percent at 4:05 p.m.in NY.

The U.S. Securities and Exchange Commission, which has been gathering information about Tesla's public pronouncements on manufacturing goals and sales targets, is intensifying its scrutiny of the company's public statements in the wake of Musk's tweet, people familiar with the matter have said.

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