Musk says Saudi fund supports Tesla buyout, talks continue

Gladys Abbott
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.

However, Reuters reports that PIF has shown no interest so far in financing Musk's proposed $72 billion deal to take the U.S. electric auto maker private.

Two class-action lawsuits have been filed against Tesla and its outspoken CEO Elon Musk, who announced on Wednesday the company had "secured" funding to delist itself.

According to estimates from Jeffrey Nassof, a director at Freeman Consulting Services, banks advising Tesla could make $90 million to $120 million in fees, while advisers to Musk could take home $30 million to $50 million.

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.

Musk, in the middle of a stock trading session on August 7, shocked Wall Street when he tweeted: "Am considering taking Tesla private at $420".

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"They first met with me at the beginning of 2017 to express this interest because of the important need to diversify away from oil". The Securities and Exchange Commission is investigating Musk's disclosure of the potential deal, according to reports earlier this week.

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.

The Public Investment Fund, which has built up a stake just shy of 5 percent in Tesla in recent months, is exploring how it can be involved in the potential deal, said the people, who asked not to be identified talking about the matter.

Saudi Arabia's Public Investment Fund (PIF) is known for its technology investments, including the $45 billion it has spent in SoftBank Group Corp's (9984.T) Vision Fund. Musk and SoftBank Group's Masayoshi Son held talks past year that touched on taking Tesla private, two people with knowledge of the discussions have said. The Saudi fund hasn't made any firm decisions on whether to increase its stake, or by how much, but talks are ongoing, sources told Bloomberg.

Musk is interested in having a wide pool of investors rather than few stakeholders. He later tweeted that investor support was already confirmed.

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