Elon Musk’s enigmatic personality and unconventional tactics are emerging as key exhibits in a trial centered around one of his most polarizing pursuits – tweeting.
Experiment, focus on a pair of announcement tweets musk got the money to get Tesla private in 2018, brought the 51-year-old billionaire into a federal courtroom in San Francisco to testify for three days, opening a hole in his often baffling mind.
Musk, who now owns the Twitter service he uses as his loudspeaker, is usually a study of contrasts during his roughly eight hours in the stands. The electric carmaker’s CEO is facing a class-action lawsuit filed on behalf of Tesla shareholders after Musk posted a tweet about the company’s acquisition but it didn’t. happen.
Through both his testimony and the evidence presented around it, Musk is seen as impulsive, rude, belligerent, and contemptuous of anyone who questions his motives as a businessman. game-changer who inspired comparisons with the late Apple co-founder Steve Jobs.
At other times, Musk seems like the visionary whose supporters hail him — an intrepid rebel who, by his own estimates, has raised more than $100 billion. la from investors. They’ve been well rewarded with his leadership of pioneering companies including PayPal in digital payments, Tesla in electric vehicles and SpaceX in rocket ships.
“It’s relatively easy for me to get investment support because my track record is extremely good,” Musk commented humorously.
But his confidence in his ability to earn the money he wanted to pursue his plans was one reason he went to court. The three-week trial will continue on Tuesday and head for jury deliberations on Friday.
Here’s what to know so far:
Drills
Evidence and testimony shows that Musk began considering taking Tesla private in 2017 so he wouldn’t have to deal with the headaches and distractions of running a publicly traded company.
Following a July 31, 2018 meeting with a top representative from Saudi Arabia’s sovereign wealth fund, Musk sent a letter to Tesla’s board outlining why he wanted to invest. personify this automaker at $420/share – about 20% higher than the stock price. at that time.
Musk was so serious that he discussed the pros and cons with Michael Dell, who went through the transition from public to private in 2013 when he led the acquisition of the personal computer company that brought the company. His name is worth $25 billion, according to trial evidence. .
Troubled tweets
The crux of the case revolved around a tweet on August 7, 2018, in which Musk announced “funding secured” to take Tesla private. private jet after it was announced that the Financial Times was about to publish a story that Saudi Arabia’s Public Investment Fund spent about $2 billion to buy a 5% stake in Tesla to diversify its interests beyond oil. mines, according to his testimony.
Amid widespread confusion over whether Musk’s Twitter account was hacked or if he was joking, hours later Musk posted another tweet suggesting an impending deal.
Musk defended the original tweet as a move in good faith to make sure all Tesla investors know that the automaker could be on track to end eight years later as a a public company.
“I have no bad motives,” Musk testified. “My intention is to do the right thing for all shareholders.”
Guhan Subramanian, a Harvard law and business professor hired as an expert for shareholder attorneys, derided Musk’s method of announcing potential buybacks as a potentially “extreme exception” to many. conflict.
Subramanian testified: “The risk is that Mr. Musk has timed the announcement of his proposal to serve his own interests rather than the interests of the company.
Where’s the money?
There is another problem that threatens to weaken Musk’s defenses. He did not finance his proposed deal or even determine the amount required to make it happen, based on testimony from Musk, other witnesses and other evidence.
That’s one reason U.S. District Judge Edward Chen decided last year that Musk’s 2018 tweets were untrue and directed the jury to view them that way.
It also led regulators to accuse Musk of misleading investors with tweets, leading to a $40 million settlement with the US Securities and Exchange Commission and demanding Musk’s resignation. Tesla chairman.
Chen ruled that the 2018 settlement, in which Musk did not admit wrongdoing and has since lamented the implementation, could not be referred to the jury.
Musk testified that he believed he had secured an oral commitment to provide whatever funds were needed for the acquisition of Tesla during a face-to-face meeting on July 31, 2018 with Yasir al-Rumayyan, Saudi Arabia’s wealth fund governor.
That was reinforced in testimony from former Tesla chief financial officer Deepak Ahuja, who was at the discussions and gave al-Rumayyan a half-hour tour of a Tesla factory.
However, a text message al-Rumayyan sent Musk after the “financial security” tweet suggested that discussions about the Saudi fund funding a private acquisition were preliminary.
“I would like to hear your plan, Elon and the financial calculations to make it happen,” al-Rumayyan wrote to Musk, according to a copy submitted as evidence during the trial.
Musk framed al-Rumayyan’s text as an attempt to back away from his previous commitment. He also confirmed the Saudi fund had made a “clear commitment” to finance the acquisition.
money movement
Following his 2018 tweets, Musk managed to raise the money needed to acquire Tesla with the help of Egon Durban, co-CEO of the private equity firm Silver Lake, which helped financed the acquisition of Dell in 2013. top executives from Goldman Sachs, an investment banking firm that has worked closely with Tesla.
In their testimony, both Durban and Dees discussed the attempt to raise money to acquire Tesla to a variety of potential investors including two Chinese companies, Alibaba and Tencent, as well as Google in initial documents containing the statement. codenamed “Project Turbo,” then “Project Titan.”
According to the documents, the acquisition would require between $20 billion and $70 billion — funding that was never close to being raised, both Durban and Dees testified, largely because Musk canceled the proposal. announced the privatization of Tesla on August 24, 2018. after consultation with shareholders.
Tesla shares are now worth eight times what they were then, after adjusting for two stock splits.
Musk still thinks he might have gotten the money he wanted, and that even if there was a shortfall, he could make up any shortfall by selling some of his stock in SpaceX due to a lack of money. privately held. That’s the strategy Musk used when he bought Twitter for $44 billion, except that he sold about $23 billion of his stock in Tesla.
Durban and Dees both testified that they were certain the acquisition money could have been raised, former Tesla chief Antonio Gracias repeated.
“He was the Michael Jordan of fundraising,” Gracias testified.
