Tesla Inc. Chief Executive Elon Musk said he has been in talks with the Saudi Arabian sovereign-wealth fund about taking the electric-car maker private and believes two-thirds of current shareholders would remain with the company, lessening the capital needed to make a deal work.
Musk's surprise comments last week 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 turn, the fund bought almost US$2 billion (NZ$3 billion) worth of Tesla shares on the market with the help of an investment bank, building up a stake just short of 5 per cent in the company.
Tesla opened at $355 Monday, an 18% discount to the $420 Musk singled out in his tweet.
Musk's tweet announcing the deal - and a proclamation of "Funding secured" - shocked investors, and he has yet to back up his claim that he has financing for the transaction.
Billionaire founder Musk would prefer to amass a group of investors who could each contribute part of the funds because he wants to avoid having one or two large new stakeholders in the company, the people said.
"Doing our best with the limited information we have, we come to the conviction that Tesla is unlikely to go private, and anticipate the board will reject Elon Musk's offer or approach", New Street's Pierre Ferragu, who has a $530 price target for the stock, said in a report Monday. That's why he tweeted on August 7 that funding had been secured. On Saturday, Reuters reported that, according to its sources, Saudi Arabia's Public Investment Fund (PIF) had "no interest" in financing Tesla's return to private ownership.
Tesla did not respond to a request for comment on the proposed class-action complaints filed in the federal court in San Francisco.
Issacs claims Musks statements were false and misleading, and were a "nuclear attack" designed specifically to "completely decimate" people who have shorted Tesla's stock.
For Saudi Arabia, an investment in Tesla could act as a hedge against the long-term decline of oil.
SoftBank's decision to back away from any potential Tesla take-private is noteworthy given its self-styled reputation as the investor du jour for any technology or tech-enabled asset that comes to market. It wasn't immediately clear how much the fund would invest in Tesla. He later tweeted that investor support was already confirmed.