Tesla CEO Elon Musk is considering leading a buyout of the electric car maker in a stunning move that would end the maverick company's eight-year history trading on the stock market. (Aug. 7) AP


Tesla CEO Elon Musk said Saudi Arabia's investment fund has offered to finance his bid to turn the electric vehicle maker into a private company.

Musk disclosed Monday that he has held discussions with Saudi Arabia's sovereign wealth fund over the past nearly two years about the possibility.

And he wrote he has "no question that a deal with the Saudi sovereign fund could be closed."

Musk's disclosure followed questions about his Aug. 7 tweet that he was "considering taking Tesla private" with "funding secured" for a deal at a share price of $420.

The development surprised Wall Street in part because Musk delivered the news in a series of tweets while Tesla's stock was still being traded – an atypical move for a publicly traded company that's subject to scrutiny from the Securities and Exchange Commission. The SEC has reportedly made inquiries into the matter since then, and multiple shareholders are already pursuing class-action lawsuits against the company.

Musk's clarification on his "funding secured" statement came in the form of a blog posted to Tesla's official website before trading began for the day Monday.


More: Tesla to suppliers: We want our money back

More: Tesla cutting 9% of workforce and Home Depot deal, CEO Elon Musk says

The post "likely reduces legal risk fallout" for Tesla, wrote CFRA Research stock analyst Efraim Levy, who tracks Tesla. He added that aspects of Musk's blog post were promising, including a plan to favor equity instead of debt to make the deal happen. But he said the company would likely benefit more from remaining public.

Musk said the managing director of Saudi Arabia's sovereign wealth fund has "expressed support for proceeding subject to" standard due diligence and related approval processes.

But he also emphasized that he is having similar discussions with "a number of other investors" because "I would like for Tesla to continue to have a broad investor base."

The Saudi fund has acquired nearly 5 percent of Tesla by accumulating shares on the open market. That stake would be worth more than $3 billion today.

The Saudis have prioritized diversifying their economy amid concerns that their tight ties to oil could eventually jeopardize the country's riches and political stability.

Any move for Tesla to go private would have to be authorized by the Palo Alto, California-based company's board and a majority of its shareholders. The board has formed an independent committee to evaluate the possibility of going private.

Musk has argued that Tesla would benefit from avoiding what he calls "short-termism" – an affliction in which publicly traded companies prioritize quarterly results over long-term growth and goals. He has also repeatedly expressed frustration over the volatility of Tesla's stock, including the proliferation of short-sellers who bet against the company.

But analysts have pointed out that, despite the volatility, Tesla investors have funded billions in losses and shown patience with the company's quality hiccups and other growing pains.

Tesla's stock was up 1.5 percent to $360.72 in early trading Monday morning.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

Read or Share this story: