https://nighthawkrottweilers.com/

Business

Elon Musk’s mysterious ways are on display in Tesla’s tweet lawsuit




SAN FRANCISCO (AP) — Elon Musk’s enigmatic personality and unconventional tactics are emerging as key exhibits in a trial involving one of his most polarizing pursuits — tweeting.

The trial, centered on a pair of tweets announcing that Musk had raised the money to take Tesla private in 2018, catapulted the 51-year-old billionaire into a San Francisco federal courtroom for three days of testimony that opened a peephole in his often inscrutable. mind.

Musk, who now owns the Twitter service he uses as his megaphone, was often a study in contrasts during his roughly eight hours on the stand. The electric car maker̵[ads1]7;s CEO is facing a class-action lawsuit filed on behalf of Tesla shareholders after Musk tweeted about a company acquisition that didn’t happen.

Through both the testimony and the evidence surrounding it, Musk came across as fierce, brash, combative and contemptuous of anyone who questioned his motives as a game-changing entrepreneur who has inspired comparisons to Apple’s late co-founder Steve Jobs.

At other times, Musk sounded like the savvy visionary his backers hail him as — a fearless rebel who, by his own estimates, has raised more than $100 billion from investors. They have been richly rewarded from his leadership of pioneering companies that include PayPal in digital payments, Tesla in electric vehicles and SpaceX in rocket ships.

“It’s relatively easy for me to get investment backing because my track record is extremely good,” Musk wryly observed.

But his confidence in his ability to get the money he wants to pursue his plans is one reason he ended up in court. The three-week trial is set to resume on Tuesday and will go to jury trial by Friday.

Here’s what you should know so far:

PLANTING SEEDS

Evidence and testimony have shown that Musk had begun thinking about taking Tesla private in 2017 so he wouldn’t have to deal with the headaches and distractions that come with running a publicly traded company.

After a July 31, 2018 meeting with a top representative from Saudi Arabia’s sovereign wealth fund, Musk sent a letter to Tesla’s board of directors outlining why he wanted to take the automaker private at a price of $420 per share — about 20% above the stock price. at the time.

Musk was serious enough that he had already discussed the pros and cons with Michael Dell, who had gone through the transition from public to private in 2013 when he led a $25 billion buyout of the PC company that bears his name, according to trial evidence . .

THE PROBLEM TWEETS

The crux of the matter hinges on an August 7, 2018 tweet in which Musk declared “funding secured” to take Tesla private. Musk abruptly posted the tweet minutes before boarding his private jet after being alerted that the Financial Times was about to publish a story that Saudi Arabia’s public investment fund had spent about $2 billion to buy a 5% stake in Tesla to diversify its interests beyond oil, according to his testimony.

Amid widespread confusion over whether Musk’s Twitter account had been hacked or he was joking, Musk followed up a few hours later with another tweet hinted that a deal was imminent.

Musk defended the initial tweet as a well-intentioned move to ensure all Tesla investors knew the automaker may be on its way to ending its then eight-year run as a public company.

“I had no bad motive,” Musk testified. “My intention was to do the right thing for all shareholders.”

Guhan Subramanian, a professor of business and law at Harvard University hired as an expert for shareholder lawyers, derided Musk’s method of announcing a potential acquisition as an “extreme outlier” fraught with potential conflicts.

“The risk is that Mr. Musk timed his announcement of his (management buyout) proposal to serve his own interests rather than the interests of the company,” Subramanian testified.

WHERE IS THE MONEY?

There is another issue that threatens to undermine Musk’s defense. He had not locked in financing for the proposed deal or even laid out how much would be needed to pull it off, based on testimony from Musk, other witnesses and other evidence.

That’s one reason U.S. District Judge Edward Chen ruled last year that Musk’s 2018 tweets were false and has instructed the jury to view them that way.

It also prompted regulators to allege that Musk misled investors with the tweets, resulting in a $40 million settlement with the US Securities and Exchange Commission that also required Musk to step down as Tesla’s chairman.

Chen ruled that the 2018 settlement, in which Musk did not admit wrongdoing and has since apologized for doing so, cannot be mentioned to the jury.

Musk testified that he believed he had secured a verbal commitment to provide where funds were needed for a Tesla acquisition during a face-to-face meeting with Yasir al-Rumayyan, governor of Saudi Arabia’s sovereign wealth fund on July 31, 2018.

That was reinforced in testimony from Tesla’s former chief financial officer, Deepak Ahuja, who was at the discussions and took al-Rumayyan on a half-hour tour of a Tesla factory.

But a text message that al-Rumayyan sent to Musk after the “secured funding” tweets made discussions of the Saudi fund financing a private buyout tentative.

“I would like to listen to your plan Elon and what are the financial calculations for taking it,” al-Rumayyan wrote to Musk, according to a copy submitted as evidence in the trial.

Musk framed al-Rumayyan’s text as an attempt to backtrack on his previous involvement. He also insisted that the Saudi fund had given an “unequivocal commitment” to finance the acquisition.

MONEY MANEUVERING

Following his tweets in 2018, Musk tried to raise the money needed for the Tesla acquisition with the help of Egon Durban, co-CEO of the private equity firm Silver Lake, which helped finance the Dell acquisition in 2013. Musk also enlisted Dan Dees, a senior executive with Goldman Sachs, an investment banking firm that had worked closely with Tesla.

In testimony, both Durban and Dee discussed efforts to raise money for a Tesla acquisition to a wide range of potential investors that included two Chinese companies, Alibaba and Tencent, as well as Google in documents initially codenamed “Project Turbo,” then “Project Titanium.”

The acquisition would have required anywhere from $20 billion to $70 billion, according to the documents — financing that never came close to being obtained, both Durban and Dees testified, largely because Musk scrapped the proposal to take Tesla private on Aug. 24, 2018. after consultation with the shareholders.

Tesla’s shares are now worth eight times what they were then, after adjusting for two stock splits.

Musk still claims he could have gotten the money if he wanted, and even if there was a shortfall, he could have covered any gap by selling some of his shares in privately held SpaceX. It’s a strategy Musk used in his $44 billion purchase of Twitter, except that he sold about $23 billion of his shares in Tesla.

Durban and Dees both testified that they had no doubt that the money for an acquisition could have been raised – echoed by former Tesla CEO Antonio Gracias.

“He’s the Michael Jordan of fundraising,” Gracias testified.





Source link

Back to top button