Feb 1, 2023
Musk Mused About Taking Tesla Private Years Before 2018 Tweet, Says Ex-Aide
(Bloomberg) -- Elon Musk was contemplating taking Tesla Inc. private as early as 2016, his former chief of staff testified at a fraud trial in testimony aimed at showing how seriously the CEO considered the transaction.
Musk is fighting claims by investors that he lied when he tweeted in August 2018 that he had “funding secured” to go private.
“It was my view that they had the capacity to get the funds to take Tesla private,” Sam Teller, who served as Musk’s top aide for about five years starting in 2014, told jurors Wednesday.
Musk’s lawyers also called Tesla board members James Murdoch and Kimbal Musk to the stand in rapid-fire succession as court-imposed time constraints forced the CEO to present his witnesses in just one day.
In contrast to evidence presented earlier in the three-week trial that Musk had done little legwork ahead of his tweet to prepare for a $60 billion deal, Teller said the subject “came up from time to time pretty much as long as I’ve known him.” Sometimes Musk was comparing the publicly traded electric-car maker with his closely held rocket ship company, SpaceX, Teller said.
“He said there were a lot of headaches from running a public company,” Teller recalled of conversations with his former boss.
Musk testified last week that his Aug. 7, 2018, tweet was “absolutely truthful,” touting what he described as an “unequivocal” commitment by Saudi Arabia’s sovereign wealth fund to back the go-private plan with tens of billions of dollars — even though he had nothing in writing. Musk ultimately dropped the plan the same month.
Read More: Tesla Investors Lost $12 Billion From Musk Tweet, Jury Told
Teller traced for the jury how Musk’s dialogue with Saudi Arabia’s Public Investment Fund began in late 2016 and carried on for about 18 months. He described the fund’s governor, Yasir Al-Rumayyan, coming to California to take a tour of Tesla’s factory.
Teller said that while he couldn’t remember the Saudis committing to a “specific number,” the PIF indicated “that’s fine” about the general notion of kicking in tens of billions of dollars.
Investors argue Musk’s tweets amounted to a violation of securities laws because his bankers had been barely consulted and hadn’t formally signed on to his take-private plan. Investment banking witnesses told jurors last week that even a week after the tweet, they were still working to figure out how the deal would be structured, including who would pay for it.
Murdoch, the younger son of media mogul Rupert Murdoch who joined Tesla’s board in 2017, told the jury about his experience with his own companies working with investors from the Middle East. “Dealing principal to principal” was important, and Musk’s negotiations with the PIF without a formal agreement was hardly a surprise, he said.
Kimbal Musk, the brother of Elon who became a director in 2004, testified that he wasn’t involved in board decisions about taking Tesla private. But before the August 2018 tweets ignited controversy, he said he dispensed some general advice to his sibling: Stop insulting people on Twitter.
“I thought my brother was above that,” he said.
Closing arguments in the trial are set for Friday, followed by jury deliberations.
(Updates with testimony by James Murdoch, Kimbal Musk)
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