6 ms·

The main question I have is about financing. If Elon owns 20% of the company now, and he doesn't intend for that to change, and he is giving the option of publ

The main question I have is about financing. If Elon owns 20% of the company now, and he doesn't intend for that to change, and he is giving the option of public shareholders to sell at $420, then who is financing this? Usually a private takeover requires a partnership with a huge private equity firm. Wouldn't releasing this without having (or identifying) that partner be premature? And wouldn't the resulting stability be dependent on that partner's exit strategy?

ISL 8y ago
He wouldn't make such an announcement without having backers lined up.
- mehblahwhatevs 8y ago
  Have you seen his tweets in just the past month or two? He's called a rescue diver a pedo and cried "fake news" when journalists have questioned Tesla's financials.
rory096 8y ago
Original tweet said "Funding secured." https://twitter.com/elonmusk/status/1026872652290379776?s=19 https://twitter.com/elonmusk/status/1026872652290379776?s=19
take4 8y ago
> CNBC reports that none of the Wall Street banks it contacted were aware of any transaction or had committed to funding a leveraged buyout of Tesla.
- peeters 8y ago
  So there's the real story. Who is this financer (or group) with ~40 billion in capital that is willing to bet long on Tesla? That's really interesting to me, if Musk is being truthful here.
  - Diederich 8y ago
    Totally, totally random thought, but I figured I'd record it, even though it doesn't seem to make sense. Bezos?
    - peeters 8y ago
      What, timed with an announcement of a merger between Blue Origin and SpaceX? :)
      - RankingMember 8y ago
        That wouldn't be the worst idea in the world considering the cost of spaceflight to begin with and the duplicate work they're undoubtedly doing.
    - glbrew 8y ago
      I highly doubt it. For starters his wealth isn't liquid enough. He would need to give up shareholder control of Amazon or take on huge debt with his control of Amazon as collateral.
    - ranman 8y ago
      I could be wrong, but I don't imagine Elon likes Bezos very much.
  - deleted 8y ago
    [deleted]
  - whataboutism 8y ago
    1. Apple 2. Saudi's 3. China
    - xbmcuser 8y ago
      Google/Alphabet. Larry Page has stated that instead of giving away his billions to charity he would prefer to give it to someone like Musk that is trying to fix world scale problems.
- CydeWeys 8y ago
  Does that prove anything though? Let's imagine a bank is working on this deal; why would they tell a reporter? It's common for companies to deny things to the press even when they're true.
  - jonknee 8y ago
    It's Wall Street and there would be rumors if someone was shopping the largest LBO ever. It's not like there are a lot of places you can go for this service, Tesla isn't going to back out on the deal because it leaked your bank has met with Elon.
    - CydeWeys 8y ago
      Would there be rumors though, when improper disclosure could potentially be illegal and bring down the SEC on your head? Also, even if there are rumors, why would that necessarily logically go from bankers talking to each other to immediately blabbing to the press?
      - jonknee 8y ago
        It's rare for word of mega deals like this to not leak out in some fashion, doubly so after it's already been tweeted about by the CEO. If they had seriously been shopping this deal it would have already been in the WSJ. Considering the letter mentioned no funding I am under the impression that this is more of an Elon solo project and less of a serious undertaking by the company.
  - dragonwriter 8y ago
    > Let's imagine a bank is working on this deal; why would they tell a reporter? There is a difference between not telling a reporter and denying it to a reporter.
11thEarlOfMar 8y ago
Could be anyone from Masayoshi Son to Yuri Milner to Blackstone. Or a consortium of several. They wouldn't have to come up with the full valuation, only need enough to buy out those who wish to sell. Articles/Bylaws would likely give Musk control, even though he only holds 20%.
- peeters 8y ago
  > Articles/Bylaws would likely give Musk control, even though he only holds 20%. But Articles and Bylaws can be rewritten at the whim of the majority shareholder, no? I don't doubt that's how it would be initially structured (otherwise it would just be a hostile takeover) I'm just saying it's putting Tesla's future in the hands of whoever holds the most shares.
  - 11thEarlOfMar 8y ago
    Google has three classes of shares: A, B and C. A shares get one vote, C shares get none and B shares get 10 votes. Brin, Page, Schmidt own all the B shares. [1] For FB, Zuck holds a class of shares where each of his counts as 10 vs. the common shares.[2] [1] https://www.investopedia.com/articles/markets/052215/goog-or-googl-which-google-should-you-buy.asp https://www.investopedia.com/articles/markets/052215/goog-or... [2] https://www.cnbc.com/2018/03/20/shareholders-wont-force-zuckerbergs-hand-in-facebook-management.html https://www.cnbc.com/2018/03/20/shareholders-wont-force-zuck...
    - peeters 8y ago
      Hmm, interesting. I thought we were just talking about voting shares. Musk has said current shareholders would be able to hold on to their shares. Do you think behind that statement he implied "but will lose voting status"?
      - 11thEarlOfMar 8y ago
        Lose or reduce. Musk would be at much greater risk as CEO if there were a small number of large shareholders. They could, in theory, band together against him to make a change. So I'd expect that as part of the deal, he'd make arrangements via voting rights to be in control. So your current 1 vote public shares may become 0 vote private shares. Or, his private shares may carry 10 votes each. On the other hand... he seems to be somewhat an idealist and may reason that his performance will stand on its own merits. I.e., the shareholders would be right oust him if they felt that was the right course of action. Will be interesting to see how this plays out.
orteam 8y ago
Maybe he is counting on shorters in need of cover to absorb most selling pressure?
Cthulhu_ 8y ago
Could be Apple maybe? They have a huge amount of dough and IMO the companies are quite similar; Apple's been rumored to work on a car for forever to compete with Tesla. It would make sense for the companies to cooperate, Tesla doing the mechanics and Apple the software / UX.
randomsearch 8y ago
Google (directly or indirectly) makes a lot of sense. They have the best self driving tech. Elon is miles ahead in electric vehicles. Perfect combination.

ISL 8y ago

He wouldn't make such an announcement without having backers lined up.

mehblahwhatevs 8y ago
Have you seen his tweets in just the past month or two? He's called a rescue diver a pedo and cried "fake news" when journalists have questioned Tesla's financials.

rory096 8y ago

Original tweet said "Funding secured." https://twitter.com/elonmusk/status/1026872652290379776?s=19 https://twitter.com/elonmusk/status/1026872652290379776?s=19

take4 8y ago

> CNBC reports that none of the Wall Street banks it contacted were aware of any transaction or had committed to funding a leveraged buyout of Tesla.

peeters 8y ago
So there's the real story. Who is this financer (or group) with ~40 billion in capital that is willing to bet long on Tesla? That's really interesting to me, if Musk is being truthful here.
- Diederich 8y ago
  Totally, totally random thought, but I figured I'd record it, even though it doesn't seem to make sense. Bezos?
  - peeters 8y ago
    What, timed with an announcement of a merger between Blue Origin and SpaceX? :)
    - RankingMember 8y ago
      That wouldn't be the worst idea in the world considering the cost of spaceflight to begin with and the duplicate work they're undoubtedly doing.
  - glbrew 8y ago
    I highly doubt it. For starters his wealth isn't liquid enough. He would need to give up shareholder control of Amazon or take on huge debt with his control of Amazon as collateral.
  - ranman 8y ago
    I could be wrong, but I don't imagine Elon likes Bezos very much.
- deleted 8y ago
  [deleted]
- whataboutism 8y ago
  1. Apple 2. Saudi's 3. China
  - xbmcuser 8y ago
    Google/Alphabet. Larry Page has stated that instead of giving away his billions to charity he would prefer to give it to someone like Musk that is trying to fix world scale problems.
CydeWeys 8y ago
Does that prove anything though? Let's imagine a bank is working on this deal; why would they tell a reporter? It's common for companies to deny things to the press even when they're true.
- jonknee 8y ago
  It's Wall Street and there would be rumors if someone was shopping the largest LBO ever. It's not like there are a lot of places you can go for this service, Tesla isn't going to back out on the deal because it leaked your bank has met with Elon.
  - CydeWeys 8y ago
    Would there be rumors though, when improper disclosure could potentially be illegal and bring down the SEC on your head? Also, even if there are rumors, why would that necessarily logically go from bankers talking to each other to immediately blabbing to the press?
    - jonknee 8y ago
      It's rare for word of mega deals like this to not leak out in some fashion, doubly so after it's already been tweeted about by the CEO. If they had seriously been shopping this deal it would have already been in the WSJ. Considering the letter mentioned no funding I am under the impression that this is more of an Elon solo project and less of a serious undertaking by the company.
- dragonwriter 8y ago
  > Let's imagine a bank is working on this deal; why would they tell a reporter? There is a difference between not telling a reporter and denying it to a reporter.

11thEarlOfMar 8y ago

Could be anyone from Masayoshi Son to Yuri Milner to Blackstone. Or a consortium of several. They wouldn't have to come up with the full valuation, only need enough to buy out those who wish to sell. Articles/Bylaws would likely give Musk control, even though he only holds 20%.

peeters 8y ago
> Articles/Bylaws would likely give Musk control, even though he only holds 20%. But Articles and Bylaws can be rewritten at the whim of the majority shareholder, no? I don't doubt that's how it would be initially structured (otherwise it would just be a hostile takeover) I'm just saying it's putting Tesla's future in the hands of whoever holds the most shares.
- 11thEarlOfMar 8y ago
  Google has three classes of shares: A, B and C. A shares get one vote, C shares get none and B shares get 10 votes. Brin, Page, Schmidt own all the B shares. [1] For FB, Zuck holds a class of shares where each of his counts as 10 vs. the common shares.[2] [1] https://www.investopedia.com/articles/markets/052215/goog-or-googl-which-google-should-you-buy.asp https://www.investopedia.com/articles/markets/052215/goog-or... [2] https://www.cnbc.com/2018/03/20/shareholders-wont-force-zuckerbergs-hand-in-facebook-management.html https://www.cnbc.com/2018/03/20/shareholders-wont-force-zuck...
  - peeters 8y ago
    Hmm, interesting. I thought we were just talking about voting shares. Musk has said current shareholders would be able to hold on to their shares. Do you think behind that statement he implied "but will lose voting status"?
    - 11thEarlOfMar 8y ago
      Lose or reduce. Musk would be at much greater risk as CEO if there were a small number of large shareholders. They could, in theory, band together against him to make a change. So I'd expect that as part of the deal, he'd make arrangements via voting rights to be in control. So your current 1 vote public shares may become 0 vote private shares. Or, his private shares may carry 10 votes each. On the other hand... he seems to be somewhat an idealist and may reason that his performance will stand on its own merits. I.e., the shareholders would be right oust him if they felt that was the right course of action. Will be interesting to see how this plays out.

orteam 8y ago

Maybe he is counting on shorters in need of cover to absorb most selling pressure?

Cthulhu_ 8y ago

Could be Apple maybe? They have a huge amount of dough and IMO the companies are quite similar; Apple's been rumored to work on a car for forever to compete with Tesla. It would make sense for the companies to cooperate, Tesla doing the mechanics and Apple the software / UX.

randomsearch 8y ago

Google (directly or indirectly) makes a lot of sense. They have the best self driving tech. Elon is miles ahead in electric vehicles. Perfect combination.