Tesla's CEO Elon Musk sued for fraud

Daniel Fowler
August 13, 2018

With Tesla's board of directors scheduled to meet with financial advisors next week, sources told Bloomberg the Saudi kingdom, through its sovereign wealth fund, is exploring strategies to participate with other investors and Tesla CEO Elon Musk in a potential transaction to buy all Tesla public shares and take the company private.

The lawsuits also claim Musk hasn't lined up the financing necessary to take Tesla private and therefore made false statements.

The lawsuits were filed three days after Musk stunned investors by announcing on Twitter that he might take Tesla private in a record $72 billion transaction that valued the company at $420 per share, and that "funding" had been "secured".

"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.

In laying out why he is considering taking Tesla private, Musk pointed in part to shorts.

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Musk said in a blog post on Monday he had "no question" that the Saudis would finance such a transaction following a July 31 meeting. The Securities and Exchange Commission is investigating Musk's disclosure of the potential deal, according to reports earlier this week.

The post fleshed out the Silicon Valley billionaire's shock announcement on August 7 that he was considering taking the company private and had "secured" funding.

Shares of Tesla are now up 13% this year, but still below their $362 price at the time of Musk's first tweet about going private around 1 p.m. Tuesday. 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. Among the reasons, they said, is that SoftBank has already placed big bets on the future of the automobile with General Motors Co., and that Tesla faces increased competition and has yet to deliver on its mass-market ambitions.

The Public Investment Fund approached Musk several months ago to discuss buying a minority stake, but he initially resisted the investment and said there were no plans to issue new shares, according to a different person familiar with the talks at the time.

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. It wasn't immediately clear how much the fund would invest in Tesla.

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