Musk says Saudi fund supports Tesla buyout, talks continue

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Under the proposal, only investors who don't want to remain with a private company would be paid and funding for the deal would come from Tesla stock, not debt.

Tesla shares "jumped 11 percent" following Musk's tweets predicting privatization of the company, leading to lawsuits filed by investors and a Securities Exchange Commission (SEC) investigation.

Some analysts have suggested that Musk could convince Tesla's top shareholders, such as Fidelity Investments and China's Tencent, to roll their equity stakes into the deal, thereby significantly reducing the amount of money needed to be raised.


The tycoon said he left a meeting with wealth fund officials on July 31 with no question that the deal could be closed - which is why he tweeted on August 7 that funding had been "secured".

Shares of Tesla surged as much as 3% in early-trading Monday, before paring their gains, after CEO Elon Musk published an update on his plans to take the company private at $420 a share.

Following the announcement of Tesla's plans to potentially go private and reports that Saudi Arabia's sovereign wealth fund had amassed a 5% stake, shares surged as high as $389 - a new record. While the entrepreneur owns 20 percent of Tesla, more than $60 billion would be needed to buy the business from public shareholders. The company, which held talks with Musk in 2017 about a possible investment, isn't interested in revisiting such a plan, said the people, who asked not to be identified as the details aren't public. The comments, along with wide reaching speculation that SoftBank was an obvious candidate to invest in Tesla, coincided with a decline in the group's Tokyo-listed shares on Friday. "So the potential investor must be patient and strategic-looking".


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. Musk said he has continued to communicate with the sovereign fund's managing director since last week, and that the managing director has "expressed support for proceeding subject to financial and other due diligence". As a result, PIF itself chose to buy about US$2 billion in Tesla shares on the market with the help of an investment bank, the person said. He also said that by taking the electric vehicle company private it would end "negative propaganda from shorts".

The Saudi government is planning to turn the PIF into a US$2 trillion powerhouse to help diversify the kingdom's oil-dependent economy. The goal is to reduce imports, increase exports, encourage foreign investments and provide jobs.


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