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Update on Taking Tesla Private
- abhiminator 8y ago> Saudi Arabian sovereign wealth fund has approached me multiple times about taking Tesla private. Interesting to see countries most dependent economically on fossil fuels heavily investing in their energy nemesis. Curious about the ramifications that might emanate out of partly giving away control of a large American automobile manufacturer to a foreign entity -- a potentially hostile one no less -- given how sensitive Tesla vehicles' proprietary technologies are from a safety/security standpoint.
- garmaine 8y agoIt's called hedging.
- dragonwriter 8y ago> Interesting to see countries most dependent on fossil fuels heavily investing in their energy nemesis. Saudi Arabia and Kuwait have been hedging against fossil fuels massively for many decades. It's been a driving force behind major regional conflicts with global participation, so it's kind of one of those things that people should generally be aware of. > Curious about the ramifications that might emanate out of partly giving away control of a large American automobile manufacturer to a foreign entity You mean like when Chrysler got taken over by Fiat?
- toyg 8y agoTo be fair, FIAT was hardly ever under the sort of nation-state influence that a sovereign fund is. They occasionally made business that "pleased", let's say, the Italian government, but it was decades before the Chrysler deal, and it was pretty rare anyway. Usually the relationship was the other way around, with the state making moves for the company to profit from, which is expected for any company. Sovereign funds are direct emanations of nation-states, which is different. When they buy a somewhat-strategic industrial asset, it is significant. The question is whether the US (and particularly this fossil-fuel-friendly administration) actually see Tesla as strategic at all - my guess is that the guys currently in charge wouldn't care one bit.
- jacknews 8y agoAre there any notable technologies? Are any of them a security issue? Or do you mean that a "foreign power" will gain knowledge of all the Tesla bugs, and therefore be able to unleash carnage on American roads, etc?
- noir_lord 8y agoThat sounds like a retroactive arse covering exercise.
- MrEfficiency 8y agoI dont believe what comes out of Elon's mouth anymore. I take his words lightly at best.
- _Codemonkeyism 8y agoExactly my thoughts when reading this.
- yellowcherry 8y agoNo, it sounds like real life. Of course HN downvotes this. Dan Grossman earns a paycheck moderating this site. This is a culture he's literally paid to promote.
- yellowcherry 8y agoYou know what's really interesting? The people who pay Dan don't participate on this site. That's how awful the culture is here. That's how bad he is at setting the tone.
- minimaxir 8y agodang is not Dan Grossman.
- yellowcherry 8y agoSorry, you're right. It's Daniel Gackle who is personally responsible for the toxic Hacker News culture. https://blog.ycombinator.com/meet-the-people-taking-over-hacker-news/ https://blog.ycombinator.com/meet-the-people-taking-over-hac...
- misja111 8y agoExactly. Reading closely, it seems that funding was not secured at all when Musk posted his Tweet. Also, I'm reading that major shareholders were not aware of the information that Musk was basing his Tweet on. I can imagine that they are not amused.
- MrEfficiency 8y agoAny idea why the Saudi (government) wants to buy Tesla? Is it part of the oil conspiracy to kill electric vehicles? Given how GM, Nissan, and others have electric vehicles, I dont think this could stop the new wave of buyers. Anyone want to take a stab at why this is happening?
- Spiritus 8y ago>They first met with me at the beginning of 2017 to express this interest because of the important need to diversify away from oil.
- petre 8y agoThey have oil money and want to diversify their assets. It's part of the plan not to depend 100% on oil because their profits suffered during the last two years as oil prices bottomed. They cannot kill the EV this time. The Saudis and UAE also invested in solar in the last few years. This is consistent with other Big Oil investments into renewables.
- deleted 8y ago[deleted]
- JumpCrisscross 8y ago> Any idea why the Saudi (government) wants to buy Tesla? They believe it to be a good investment and think (a) Tesla's management will do better without the public market's constant scrutiny and/or (b) their own books could benefit from less apparent volatility. > Is it part of the oil conspiracy to kill electric vehicles? Probably not. The Saudi sovereign wealth fund has been set up as a hedge against their oil-based economy.
- deepvibrations 8y agoIt would make sense to hold companies such as Tesla as a hedge against oil.
- mr_toad 8y ago‘It wasn’t a lack of stone that ended the Stone Age’ That was one of their own oil ministers. They can see the writing on the wall.
- drngdds 8y ago$420? He must be high!
- vectorEQ 8y agoonly useful contribution to this disucssion thank you
- JumpCrisscross 8y ago> the Managing Director of the [Saudi Arabian sovereign wealth] fund Does anyone know to whom this refers?
- whatok 8y agohttps://www.bloomberg.com/research/stocks/private/person.asp?personId=241125061&privcapId=12455701 https://www.bloomberg.com/research/stocks/private/person.asp... that's what "PIF managing director" on google gives me.
- rtkwe 8y agoFrom the first Google result for 'Managing Director of the [Saudi Arabian sovereign wealth] fund' it's Yasir al-Rumayyan
- _Codemonkeyism 8y agoSounds like trying to get the SEC away.
- deleted 8y ago[deleted]
- jasonmaydie 8y agoSaudi Arabia? I know they have money but it's like selling your chicken coop to a snake
- bovermyer 8y agoWhy do you say that?
- WhompingWindows 8y agoNo, it's Saudi Arabia attempting to diversify its holdings. If they've seen oil-rich countries fall again and again to low oil prices, it makes a lot of sense for them to hedge their bets and protect against the future where solar (they're investing a ton in this) and EVs may remain supreme. If these investments don't pan out, they still have a massive amount of very cheap oil reserves and will keep those longer than most other oil producers.
- InitialLastName 8y ago>If they've seen oil-rich countries fall again and again to low oil prices ... especially in context of how successful they've been at lowering oil prices to hurt their rivals.
- jasonmaydie 8y agoyes yes, I get that but it also competes with their current cash cow. They obviously want a say in this technology that is inevitably going to destroy their oil revenues (and that is not a good thing).
- hn_throwaway_99 8y ago> I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving. This is why I referred to “funding secured” in the August 7th announcement. He has a waaaaaayyy different definition of "secured" than I (and I think the SEC) do. That tweet is going to cost Tesla and Musk big time.
- bagosm 8y agoI think all the late mishaps have something to do with negotiating down the price for the Saudi Arabians to come onboard.
- shriver 8y agoI wish I were as optimistic about Musk as you are. This seems a lot like a convenient re-imagining of the conversations he had to try and persuade people that he wasn't deliberately manipulating a short-squeeze. He's just some country bumpkin who don't understand these fancy contracts those city types insist on, he had a conversation and a hand shake and that's all he needs.
- vinceguidry 8y agoIf he actually follows through with a deal, can he still be held culpable for market manipulation?
- garmaine 8y agoI don't know, that sounds like a handshake agreement, right? I wouldn't balk at calling a handshake agreement "secured" given the context.
- gamblor956 8y agoBetween businesses, a handshake agreement means nothing. If the agreement is not committed to paper it doesn't exist. However, a handshake agreement could be valid between individuals depending on the context.
- AlexandrB 8y agoHow is Tesla going private if the goal is for potentially all its current shareholders to remain? Isn't there a limit on the number of investors a private company can have[1]? What if I own Tesla stock? Do I become a private shareholder afterwards? Does this just mean I don't get quarterly reports anymore? What if I still want to get quarterly reports? If I am still getting the same reporting as before, in what meaningful way is Tesla private? None of this makes a lick of sense. [1] https://blog.gust.com/limiting-the-number-of-shareholders-in-private-companies/ https://blog.gust.com/limiting-the-number-of-shareholders-in...
- JumpCrisscross 8y ago> if the goal is for potentially all its current shareholders to remain? Revise "all current shareholders" to "all current material shareholders" and Elon's tweets make more sense. > Isn't there a limit on the number of investors a private company can have? Not technically. But you have to do all the expensive things a public company does if your "securities are 'held of record' by either 2,000 persons, or 500 persons who are not accredited investors" [1]. Practically speaking, those are the limits. [1] https://www.sec.gov/info/smallbus/secg/jobs-act-section-12g-small-business-compliance-guide.htm https://www.sec.gov/info/smallbus/secg/jobs-act-section-12g-...}
- berberous 8y agoA tweet from him: "My hope is all current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment." Still doesn't really make sense to me though. Not sure how that would work.
- chillydawg 8y agoSaudis&co give fund $lol, fund buys all tesla stock. Existing stockholders given option to buy % of the fund's stock with the cash they got from selling shares.
- JumpCrisscross 8y ago
- liaukovv 8y agoTo me it seems that the deal relies on 2/3 of current investors being willing to keep their money in the company while losing any leverage they have to control Elon at least in some way. I wonder if these estimations are correct, especially for bigger funds.
- martin_bech 8y agoNot at all true. if you have 20% of the stock of a private or public company is exactly the same voting wise etc. The only difference, is thats its publicly traded, and the pros and cons of that (very liquid, quarterly reports etc.).
- WhompingWindows 8y agoI'd be interested to know who besides the Saudis are interested. Who are the biggest players? I'm guessing Elon has many, many wealthy friends with huge numbers of Tesla shares that are interested in this plan.
- jbergens 8y agoMaybe he could contact the Norwegian Oil Fund also. They should also be interested in something else than oil and Tesla sells a lot of cars there. https://www.nbim.no/en/the-fund/ https://www.nbim.no/en/the-fund/
- agnsaft 8y agoI cannot possibly imagine that Norway would gamble with such a large stake in a single company. Such funds usually have some strategies to reduce risk and thereby protect the wealth of their citizens.
- mabbo 8y agoMusk needs to step out of the limelight. It's obvious that he loves it, but half the news about him is the stupid things he's done or said on Twitter or on blog posts. It does him no favors and makes him look like a child who has just figured out he can scream, and that the world will react when he does[0]. Elon, go back to what you're best at: inventing, being in the lab, running the factory, making the world better with your mind. Stop trying to be famous because it does you more harm than good. The biggest danger to Tesla today is an over-inflated ego. [0](I wonder if any politicians have figured this out?)
- knight-of-lambd 8y agoI disagree from a practical standpoint. Personal infamy is essentially free advertisement, up to a certain limit. As long as Elon isn't perceived as running the company into the ground. He spends a few seconds tweeting and suddenly his name and Tesla is plastered over the next news cycle. Great ROI.
- nickik 8y agoHe has always done that going back for many years.
- haaen 8y agoI'm wondering how Musk's compensation scheme will change when Tesla becomes private again. It was approved a few months ago by Tesla shareholders. It gives Elon Musk no salary, only restricted stock awards. They can reach a value of tens of billions of dollars. Restrictions for the full package: Tesla has to reach annual sales of 175 billion and the stock market has to give TSLA a market cap of 650 billion.
- deleted 8y ago[deleted]
- panarky 8y agoThis is strategic for the Saudis. Other strategic investors and sovereign wealth funds that will not want to see Tesla controlled by a competitor for 10% over today's price. Norway, China and Abu Dhabi each have SWFs larger than Saudi Arabia [1], and the energy implications of letting Tesla go would be strategic for each of them. Tesla's market cap is only 6% of Apple's, and Apple isn't geopolitically strategic. We may see a bidding war for Tesla before they go private. [1] https://en.wikipedia.org/wiki/Sovereign_wealth_fund#Largest_sovereign_wealth_funds https://en.wikipedia.org/wiki/Sovereign_wealth_fund#Largest_...
- uhnuhnuhn 8y agoA Saudi government owned Tesla will lose me as a customer. If you're eager to do business with the Saudi government your moral compass is seriously out of whack.
- berberous 8y agoGreater good? For all the advantages and potential success of TSLA, it is in a precarious financial position and could fail. If the Saudis want to dump money into it and accelerate the world's transition to solar and electric cars, seems like a net win to me.
- nathanvanfleet 8y agoBy any means necessary I guess.
- rsynnott 8y agoIf Tesla collapsed tomorrow, I don't see that that'd make a huge difference to adoption of electric cars in the long-term. Arguably, Nissan collapsing would be worse. The Leaf is a much better model for widespread adoption than Tesla's stuff.
- MrEfficiency 8y agoI was going to say GM's Bolt/Volt since it was one of those 'best cars of the year'. If that fails + is electric, thats a bad indicator for the future. Tesla gets a pat on the back for trying to be new/different. The quality of Tesla is nothing like established companies. You cant even blame Tesla, they dont have data like a company thats been around for decades.
- rsynnott 8y ago> I was going to say GM's Bolt/Volt since it was one of those 'best cars of the year'. Barely available outside the US. There's the Opel Ampera, which is mostly a GM Volt, but it's weirdly expensive so no-one buys it. The Leaf is the world's best-selling electric car, for now (especially if you include its very close relatives like the Renault Zoe; I don't think that's precisely the same platform, but it's close).
- paulus_magnus2 8y agocapital required for going private would be funded by equity rather than debt, approximately two-thirds of shares owned by all current investors would roll over into a private Tesla. Musk needs to find 23 friends willing to put $1b into a retirement-fund. The fund takes over the existing shares and buys whoever wants to exit at $420.
- csomar 8y ago$358 is what TSLA is trading at right now (30minutes after this blog post hit HN). I'm guessing the traders are calling BS on whatever Musk has in hands. Imo, this looks like a stage to liquidate shorters (which Musk hates). Musk could have mentioned here that S.A. had "committed" in some way to a private deal. He didn't. They are still negotiating. There is literally 0 reasons why the stock will trade below $420 if the funding was "secured" let alone trade 15% below that.
- panarky 8y agoThe price is up from Friday's close.
- freerobby 8y agoThere's more to a buyout than the funding though; lack of board approval or any agreement on terms (i.e. not just financial terms) are obviously deal-breakers. Certainly the market doubts whether this deal will go through, but it's not clear to me that it's all about Tesla's access to capital.
- csomar 8y agoI'd like to be convinced otherwise (both because I like what Tesla is doing and I think Musk is a great executer) but I don't find anything on that blog post that suggest that "funding is secured".
- freerobby 8y agoOh, I agree about that. I'm just saying that even if everybody felt that funding was secured, the price would still not be at $420, because there are other risks of a deal like this falling through.
- csomar 8y agoSure but this means that interested investors are willing to put $420 for Tesla. Which means its' price should be higher.
- jaaames 8y agoIt's disconcerting this is written in the first person from Musk and not from a communications team as a public statement from the company. I think it's rather Freudian about his world view and behavior. He seems to have an opinion on everything and disregard experts left and right. I certainly wouldn't be comfortable with this personality running a company this size. Some CTO/engineering role, sure, CEO and board member with everything that entails is a time bomb.
- mergejoin 8y agoHave you considered the possibility that this blog article was reviewed by legal experts before being posted? I don't know of course but that's a possibility.
- deleted 8y ago[deleted]
- memossy 8y agoMusk betting the farm on the Saudis basically saying 'Insh'Allah'
- Nokinside 8y agoPrivate companies are allowed to have up to 2,000 shareholders under they fall under the same SEC reporting requirements as public companies. Tesla could keep big investors and smallish investors with over $1 million in investable assets or yearly income above $200k if they accredited themselves. Other issue is what kind of owner PIM is. In principle it's long term patient investor. KSA has a new active prince/ruler that is self assured and proud. He is really sovereign and relationship to him must be well managed. We all know that Musk not a diplomat in his public or private communications. Saudis have had little bit of cash flow problems because they have constant budget deficit is typically 10-15 percent of their GDP or ~$50B/year and it probably just grows in the future . On paper PIM has $2 trillion in assets, but most of it is Saudi Aramco. Aramco IPO would generate cash flow but it's delayed, probably because there is fair amount of air in the valuation. Saudi Arabia has previously inflated it's oil reserves as a political decision to match some OPEC agreements and real production capacity potential is top secret. If KSA continues to have cash flow problems and Tesla is disappoints somehow, Tesla may end up at the hands of corporate raiders like Carl Icahn.
- shriver 8y ago> To be clear, when I made the public announcement, just as with this blog post and all other discussions I have had on this topic, I am speaking for myself as a potential bidder for Tesla. Elon Musk sent an e-mail to all his employees on August 7th, and published the e-mail to the world. In the e-mail he made a number of quite worrying statements as the CEO of the company and some outlandish claims. One week later on August 13th, Elon Musk rips off his mask and cackles manically: Behold! It was me all along! Not the mild mannered CEO of your heart, but I have been secretly talking as a potential bidder for your company! Moohahaha.
- runamok 8y agoI'm confused why elon says 2/3rds of shareholders would keep invested in a private Tesla. How would they ever get their money back out? Only if they went public in future or if they sold to another party? Based in their market cap compared to GM, Toyota, etc. that seems a bit crazy.
- nickik 8y agoYou can still trade stocks and there are events to do that.