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Comment by peeters | Hacker News Reader

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?

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> 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.

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.

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.

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?

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.

> 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.

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.

Fidelity or Google comes to mind. I think at some point they were having discussions with Google but then the company overcame the difficult conditions so they halted the talks: https://www.theguardian.com/technology/2015/apr/21/google-al...

Just guessing.

That could be Softbank. They already have $200 billion in investment lined up.

And apparently they are to some extent disillusioned investing in internet companies.

Totally, totally random thought, but I figured I'd record it, even though it doesn't seem to make sense.

Bezos?

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.

What, timed with an announcement of a merger between Blue Origin and SpaceX? :)

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.

I could be wrong, but I don't imagine Elon likes Bezos very much.

1. Apple 2. Saudi's 3. China

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.

Original tweet said "Funding secured."

https://twitter.com/elonmusk/status/1026872652290379776?s=19

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.

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%.

> 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.

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...

[2] https://www.cnbc.com/2018/03/20/shareholders-wont-force-zuck...

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"?

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.

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

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.

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.

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

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