Saudis in talks to take Tesla private: Elon Musk

Saudis in talks to take Tesla private: Elon Musk
Tesla chief executive Elon Musk said he was in talks with Saudi Arabia's sovereign wealth fund and other investors to take the electric automaker private.
3 min read
13 August, 2018
Elon Musk confirmed the news in a blog post on Monday [File Photo: Getty]

Electric automaker Tesla said on Monday it was in talks with Saudi Arabia's sovereign wealth fund and other investors to take the company private.

Tesla chief executive Elon Musk confirmed the move in a blog post where he said he had "no question" that the Saudis would finance such a transaction following a 31 July meeting.

The transaction would be structured with equity so as not to burden Tesla with crushing debt, Musk added.

"I continue to have discussions with the Saudi fund, and I also am having discussions with a number of other investors, which is something that I always planned to do since I would like for Tesla to continue to have a broad investor base," Musk wrote.

"It is appropriate to complete those discussions before presenting a detailed proposal to an independent board committee."

Musk added that the Saudi Arabian sovereign wealth fund "has approached me multiple times" starting in early 2017 about taking Tesla private.

He said the Saudis were interested "because of the important need to diversify away from oil" and added that the sovereign fund "has more than enough capital needed to execute on such a transaction".

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

Last week, Musk's surprise comments sparked speculation he would need to borrow massive amounts to take Tesla private, a move that could allow the company to operate without requirements for financial reports and other pressures of a publicly traded firm.

In his blog on Monday, Musk said that reports that more than $70 billion would be needed to take Tesla private "dramatically overstate the actual capital raise needed" because he expected some shareholders to remain invested in the firm.

His comment that he wanted to launch a buyout at $420 a share "would only be used for Tesla shareholders who do not remain with our company if it is private," Musk said in the blog.

"My best estimate right now is that approximately two-thirds of shares owned by all current investors would roll over into a private Tesla."

Tesla shares jumped one percent at the opening to $359.28.

'Vision 2030'

Saudi's young crown prince has been at the helm of a programme of reforms - known as Vision 2030 - looking to modernise the country while seeking to diversify its economy away from a reliance on oil and gas.

Long known for its ultra-conservative mores, the kingdom has embarked on a wide-ranging programme of social and economic reforms driven by Mohammed bin Salman.

But critics insist the reforms are cosmetic, intended to give the kingdom a much-needed PR boost after growing criticism in the West regarding the regime's links with hard-line Wahhabi clerics, human rights abuses and bloody war in Yemen.

While the reforms have been implemented, the crown prince has also rounded up potential opponents and activists, including women's rights campaigners.