Saudi interest sparked tweet on taking Tesla private, Musk says
Elon Musk, Tesla’s chief executive, said Monday that he had held meetings with representatives of a Saudi sovereign wealth fund who expressed an eagerness to help him take the electric carmaker private.
Writing in a post on Tesla’s corporate blog, Musk offered his fullest explanation yet for what he said were the circumstances behind his Aug. 7 message on Twitter that he was “considering taking Tesla private at $420” and had “funding secured.” The post sent Wall Street scrambling for more information.
In the blog post, Musk said the Saudi fund had approached him several times about taking the company private as part of the country’s efforts to diversify its economy beyond oil.
Musk said that after several meetings that began in early 2017, he had left talks with the fund’s managing director July 31 “with no question” that a deal could be closed and “that it was just a matter of getting the process moving.”
“I understood from him that no other decision makers were needed and that they were eager to proceed,” Musk wrote. He added that he had stayed in contact with representatives of the Saudi fund, which he said had recently bought a stake of almost 5 percent in Tesla, and has also been in touch with other investors.
Musk said he had notified the Tesla board of his intentions Aug. 2.
Tesla shares jumped nearly 11 percent after the Twitter post and officials at the Securities and Exchange Commission contacted the company to ask why Musk had not made the announcement in a regulatory filing.
John Reed Stark, a former lawyer at the SEC who specialized in investigating internet fraud cases, said Musk was complicating things for himself with every tweet and blog post.
But he said it was not clear that the SEC could make a case that there had been market manipulation. He said it would come down to Musk’s intent when he made his initial comment about “funding secured.”
“In no way is this a slam dunk without documentary evidence or testimony to show an intent to defraud,” said Stark, who runs a cybersecurity consulting business. “These are very difficult cases to prove.”
Musk said Tesla’s board was forming a special committee to evaluate any potential plans to go private. He stressed that the process would largely be financed through equity, rather than through a more common leveraged buyout approach.
“I do not think it would be wise to burden Tesla with significantly increased debt,” he wrote.