Published: Mon, August 13, 2018
Finance | By Jaime Brady

Saudi Arabia might be interested in helping Tesla go private

Saudi Arabia might be interested in helping Tesla go private

Saudi Arabia is exploring how it could bankroll Elon Musk's ambitious plan to take Tesla private, as burnt short-sellers sue the electric vehicle entrepreneur over his bombshell tweet last week. Musk wrote that he left the meeting with "no question" that a deal could be closed with the Saudi fund to take Tesla private.

Recently, Tesla CEO Elon Musk tweeted he was considering taking the company private and had secured funding for the same. The talks between the Saudi fund and Tesla reportedly began before Musk's tweet on August 7.

The lawsuits filed by Isaacs and William Chamberlain said Musk's and Tesla's conduct artificially inflated Tesla's stock price and violated federal securities laws. At least two investors have sued Musk and Tesla alleging share-price manipulation.

Musk said the company will be taken private at $420 per share. They then held several additional meetings with me over the next year to reiterate this interest and to try to move forward with a going private transaction.

The revelation comes days after Musk's claim in an August 7 Twitter post that financing for a deal to take Tesla private had been "secured".

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Here's what taking Tesla private means for the company and Elon Musk
Saudi Arabia's Public Investment Fund, a major backer of the Vision Fund, has built a $2 billion stake in Tesla already. Trading in Tesla was halted for an hour and a half on Tuesday afternoon, by which time the stock had soared to $370.

"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. I will now continue to talk with investors, and I have engaged advisors to investigate a range of potential structures and options.

The current talks about the PIF potentially participating in a take-private transaction started in recent weeks, the other people said. This source said that the Saudi fund would not make an investment of this kind without seeking guidance first from Softbank. While the entrepreneur owns 20 per cent of Tesla, more than US$60 billion would be needed to buy the business from public shareholders. The group's Vision Fund - an nearly $100 billion pool of capital dedicated to investing in the industry - has recently invested in coworking company WeWork Co. and food-delivery service DoorDash Inc.

Musk is interested in having a wide pool of investors rather than few stakeholders.

"Doing our best with the limited information we have, we come to the conviction that Tesla is unlikely to go private, and anticipate the board will reject Elon Musk's offer or approach", New Street's Pierre Ferragu, who has a $530 price target for the stock, said in a report Monday.

The Saudi government is planning to turn the fund into a $2 trillion powerhouse to help diversify the oil-dependent nature of the kingdom's economy.

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