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Saudi Fund in Talks to Invest in Tesla Buyout Deal, Report Says (bloomberg.com)
Saudi Arabia's sovereign wealth fund is in talks that could see it becoming a significant investor in Tesla as part of Elon Musk's plan to take the electric car maker private, Bloomberg reported Sunday, citing a person with direct knowledge of the fund's plans. From the report: 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, the person said on condition of anonymity. Discussions began before the controversial Aug. 7 tweet by Musk, who is Tesla's co-founder and chief executive officer, saying he was weighing a plan to take the company private. The PIF sees its investment in Tesla as a strategic way for the world's biggest crude producer to hedge against oil, the person said. The Saudi fund hasn't made any firm decisions on whether to increase its stake, or by how much, but talks are ongoing, the person said. It wasn't immediately clear how much the fund would invest in Tesla.
Apparently some people have trouble understanding the difference between "having secured funding sources" and "having negotiated a deal that's ready to present to shareholders for a vote".
A year ago, Tesla had secured funding for a buyout deal from Softbank. But the deal negotiations fell apart over the level of control (Musk didn't want Softbank basically having veto authority over all company decisions).
Several years ago, Tesla had secured funding for a buyout deal from Google. But during the negotiations, Tesla's financial fortunes turned around and Musk broke off the negotiations.
There's no shortage of people out there who would consider a 20% premium not unreasonable for gaining significant control of the company (and of course its corresponding value surge when its shorts are forced to all cover at once). I estimate the total cost of the buyout to be on the order of $20-25B, maybe as much as $30B, depending on the details (a big question is who can remain on as investors). Musk obviously won't be selling his stake, and most (but not all) institutional investors seem to think that $420 is below their sell price. We're polling retail investors right now on TMC and it looks like most think $420 isn't even close to their selling point. But there's a number of regulations that may make it difficult for some parties to remain on if Tesla goes private.
With a buyout on the order of a few tens of billions of dollars, and a desire that no single party come close to a majority stake, individual investments can be expected to be on the order of a few billion dollars each. There's a great number of companies / individuals / funds out there for which this is a reasonable investment range. And the Saudi sovereign wealth fund is definitely among them. I am not privilege to the Saudis' investment structure, but the Norwegian sovereign wealth fund has a ton of investments over $1B (but only one over $8B).
Assuming ethanol comes from murdered children and the hydrogen from magic, hydrogen saves 132% more lives than ethanol.
It was actually a way to convey information to a potential investor that protects him from SEC action. He had lined up terms with one player, but he doesn't 100% like the terms. He wants to have another player provide better terms, but if he revealed to the other player he had a particular price already matched, that would be enough for them to buy in and profit. By tweeting the price and that enough funding was lined up, it is made in a public way, so he can continue negotiating with the 2nd player ASAP. He didn't bother filing with the SEC before tweeting, because he didn't want to slow things down. He could have actually been negotiating with the 2nd player right as he tweeted, and use it as a public way to reveal information without even stopping the meeting.
Do the Saudis have the money? Answer: Yes.
Does there exist a set of terms under which the Saudis would be willing to provide the money? Answer: Apparently yes.
Are terms agreed upon? Answer: No.
Are the Saudis the only player involved? Answer: No.
Summary: Is funding secured? Yes. Is a deal complete and ready to present to shareholders? No.
Apparently you were wishing that Elon had tweeted "Buyout deal for Tesla complete; all terms negotiated and ready to be voted on at next shareholder meeting".
Assuming ethanol comes from murdered children and the hydrogen from magic, hydrogen saves 132% more lives than ethanol.
Clearly a lot of people want Musk and Tesla to fail and thought that the privatization messages that came out late last week was Musk losing it. I'm not a fanboy, but I must say there's a certain amount of amusement to be gained from seeing the posts and reactions of people who want him (and his businesses) to fail.
Hate Musk and his products all you want, but don't try to bet against him.
Mimetics Inc. Twitter
You know, maybe if Musk had wanted to make clear that he hadn't accepted any terms yet, he shouldn't have made any definitive statements, but rather have started off his post with something like "Am considering taking Tesla private...", and continually used words like "if we go private" multiple times, "would be", "in any scenario", etc, and only talked about "investor support".
'... oh wait.
Assuming ethanol comes from murdered children and the hydrogen from magic, hydrogen saves 132% more lives than ethanol.
There is a famous quote by Sheikh Rashid bin Saeed Al Maktoum "My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel."
Maybe the SA leadership wants to end up driving Teslas instead of camels.