Published: Mon, August 13, 2018
Finance | By Gustavo Carr

Saudi Arabia eyes enlarged stake in Musk’s private Tesla

Saudi Arabia eyes enlarged stake in Musk’s private Tesla

Saudi Arabia's sovereign wealth fund is in talks that could see it becoming a significant investor in Tesla as part of Elon Musk's plan to take the electric auto maker private, according to people with knowledge of the fund's plans.

The lawsuits were filed three days after Musk stunned investors by announcing on Twitter that he might take Tesla private in a record $72 billion transaction that valued the company at $420 per share, and that "funding" had been "secured".

"I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving", Musk wrote.

Musk has not offered evidence that he has lined up the necessary funding to take Tesla private, and the complaints did not offer proof to the contrary.

Musk on Monday posted on Tesla's website to further explain what's been happening behind the scenes as Tesla potentially prepares to go private. That price "would only be used for Tesla shareholders who do not remain with out company if it is private", Musk said.

More news: Stolen Alaska Airlines plane crashes after unauthorized takeoff from Seattle-Tacoma airport

He said the Saudis were interested "because of the important need to diversify away from oil" and added that the sovereign fund "has more than enough capital needed to execute on such a transaction". The U.S. Securities and Exchange Commission is examining whether the tweet was meant to be factual, according to a person familiar with the matter, and at least two investors have sued Musk and Tesla alleging share-price manipulation.

Musk's August 7 tweets helped push Tesla's stock price more than 13 percent above the prior day's close.

One suit claims Musk and the company committed fraud in a "short squeeze" scheme to drive up Tesla's stock price higher. It also reflects the fact that Tesla, once the clear leader in the electric-car market, is facing increasing competition and has yet to deliver on its mass production ambitions. On Saturday, Reuters reported that, according to its sources, Saudi Arabia's Public Investment Fund (PIF) had "no interest" in financing Tesla's return to private ownership.

As the intrigue enters a second week, with pressure increasing on the billionaire founder to explain how a deal would be funded, one of the world's most active investors has already ruled itself out.

The PIF and Tesla didn't respond to requests for comment. "I continue to have discussions with the Saudi fund, and I also am having discussions with a number of other investors, which is something that I always planned to do since I would like for Tesla to continue to have a broad investor base". Sources said he is canvassing other potential investors including asset managers.

Like this: