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Elon Musk says Saudis back Tesla buyout

13 August, 2018, 18:24 | Author: Sara Gill
  • Jean-Claude Juncker Li Keqiang and Donald Tusk

Saudi Arabia's sovereign wealth fund is in talks to increase its investment in Tesla as part of Elon Musk's buyout plan.

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.

Musk says he left a meeting with wealth fund officials July 31 with no question that the deal could be closed.

Musk in his blog elucidated his reasons of making a public announcement. Musk and his advisers are seeking a wide pool of investors to back a potential take-private of the automaker to avoid concentrating ownership among a few new large holders, according to people familiar with the matter. "It wouldn't be right to share information about going private with just our largest investors without sharing the same information with all investors at the same time", he wrote.

Tesla had burned through $ 739.5 million in cash in the second quarter and Musk had assured that the company will post a profit in the next quarter.

His comments in which he said he is considering taking the green vehicle maker private for $420 a share shocked Wall Street and sent Tesla stock surging.


The Saudi fund's talks began before the controversial August 7 tweet in which Musk said he was weighing a plan to take the company private.

"They first met with me at the beginning of 2017 to express this interest because of the important need to diversify away from oil". "I understood from him that no other decision makers were needed and that they were eager to proceed". Since the meeting, the men have continued discussions and the managing director has expressed support "subject to financial and other due diligence and their internal review process for obtaining approvals", Musk wrote. He has also asked for additional details on how the company would be taken private, including any required percentages and any regulatory requirements.

The amount of funding needed would depend on how many current investors want to remain part of the $60.9 billion company if it goes private.

These pieces of news pushed Tesla's share price around 12 per cent higher, although most of those gains have since disappeared as reports emerged from The Wall Street Journal and Bloomberg stating the US Securities and Exchange Commission (SEC) had sent a formal enquiry to Tesla about its funding claims. I will now continue to talk with investors, and I have engaged advisors to investigate a range of potential structures and options.

The proposed class period in Isaacs' lawsuit runs from the afternoon of Aug. 7 through the next day, and in Chamberlain's lawsuit runs from Aug. 7 to Aug. 10.

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