Saudi Arabia May Provide Funding to Take Tesla Private

The Saudia Arabian Sovereign Wealth Fund will provide the funding required to take Tesla private at $420 a share, company CEO Elon Musk revealed in a blog post Monday. 

While Tesla and Saudi Arabia have yet to reach an official deal on the matter, Musk said a recent meeting with managing directors for the investment fund left him with “no question,” that a deal would soon be reached. That is why he said that funding had already been secured to take Tesla private, he claims. Saudi Arabia first approached Musk about taking Tesla private back in 2017, expressing interest in diversifying its investments in areas apart from oil.

Musk said talks with the wealth fund in regards to funding Tesla’s transition to a private company are still ongoing.

“Following the August 7th announcement, I have continued to communicate with the Managing Director of the Saudi fund,” Musk said in the blog post. “He has expressed support for proceeding subject to financial and other due diligence and their internal review process for obtaining approvals. He has also asked for additional details on how the company would be taken private, including any required percentages and any regulatory requirements.”

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Tesla expects two-thirds of its current shareholders to retain their stock, so the Saudi government would only have to buy out one-third of shareholders for the proposed $420 price. This would make the buyout worth approximately $23.6 billion – much less than the $70 billion figure that was reported by some media outlets last week.

This announcement provides more insight  into how Tesla would pay for such a shareholder buyout, but this story is still developing. Saudi Arabia isn’t the only investor potentially interested in helping to take Tesla private, with Musk saying he’s engaged in talks with other investors as well.

“As mentioned earlier, I made the announcement last Tuesday because I felt it was the right and fair thing to do so that all investors had the same information at the same time,” Musk said in the post. “I will now continue to talk with investors, and I have engaged advisors to investigate a range of potential structures and options. Among other things, this will allow me to obtain a more precise understanding of how many of Tesla’s existing public shareholders would remain shareholders if we became private.”

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