Elon Musk’s stunning tweet that he wanted to take Tesla Inc. private and had funding secured was a classic Musk moonshot - given credibility only by the sense that if anyone could possibly pull such a brazen feat, he was the guy.
The initial scoffing after that August 7 post gave way to hiring of bankers to a board meeting where, just maybe, it was ready to take shape. Then Musk aborted his own mission, when hastily assembled bankers and advisers had barely started work, according to people familiar with the matter. Musk was perhaps spooked by blowback from investors he was sure would support him, including key backers from Saudi Arabia, according to other people.
Most shareholders wanted Tesla to remain public, the billionaire CEO conceded in a Friday night blog. Large institutional shareholders had limits on how much they could invest in a private company, and that there was no proven path for most retail investors, who are among his most ardent and adoring fans. “The sentiment, in a nutshell, was ‘please don’t do this,’" wrote Musk.
The unfolding story suggests Musk was sorely mistaken when he tweeted “funding secured” and later told the world “investor support is confirmed,” based on his belief that Saudi Arabia’s Public Investment Fund was eager to back his venture. The US Securities and Exchange Commission is now investigating his tweets and blog posts, which triggered the stock gyrations throughout August.
Musk’s vocal ambitions stirred unease among Saudi officials about the publicity surrounding their potential role, according to people familiar with the matter who asked not to be identified. The Saudis were unhappy about Musk detailing his talks with the Kingdom’s sovereign wealth fund in an August 13 blog post, where the CEO justified his earlier tweet about “funding secured” on their interest, the people said. On top of that, there were concerns about potential fallout from shareholder lawsuits and the SEC investigation, the people said.
While the Saudis were open to making a significant investment in the effort as a way to help the kingdom hedge against oil and attract technology expertise to the region, the fund mainly was interested in a minority stake to limit its exposure to a single deal and save resources for other projects, the people said.
Musk and the Saudis hadn’t yet reached an agreement on the terms or structure of their participation before he pulled the plug, the people said. In addition to its interest in Tesla, the Saudi sovereign wealth fund is considering an investment in aspiring US electric-car maker, Lucid Motors Inc., one of the people said.
Other investors made their concerns widely known. Wood, of ARK Investment, published an open letter to Musk and Tesla’s board Wednesday in which she stated that Tesla should remain a public company. “Thank you for the thoughtful letter,” Musk responded on Twitter.For all the latest transport news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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