Yesterday’s friends seem to have become today’s enemies.
Elon Musk, the richest man in the world, relied in 2018 on Saudi Arabia to justify his desire to take Tesla private.
“Am considering taking Tesla private at $420,” the billionaire entrepreneur posted on Twitter on August 7, 2018. “Funding secured.”
“Funding secured’ triggered an investigation by the Securities and Exchange Commission (SEC). This investigation had led a few weeks later to a settlement including a fine of $20 million for Musk and another penalty of $20 million for Tesla (TSLA) – Get Tesla Inc Report. The CEO had also lost his position as Chairman of the Board of Directors.
But since then Musk has kept repeating that he had assurances from Saudi Arabian that they would finance the operation.
“Mr. Musk was considering taking Tesla private at $420 a share. Funding was secured. There was investor support. These conclusions are supported by extensive contemporaneous evidence, including discussions with Saudi Arabia’s sovereign wealth fund (the “PIF”) and Tesla’s Board, as well as the undisputed fact that there was sufficient funding for a go-private transaction, from the PIF or otherwise,” lawyers for the billionaire said in court documents in February.
The Tech tycoon repeated it himself on April 14.
Musk vs Saudi Prince
This past suggests that there is a good relationship between Elon Musk and Saudi Arabia. But as often happens with the billionaire, when you don’t agree with him you very quickly become an enemy. Therefore it does not spare you.
This adage has just taken on its full meaning in the surprise and hostile offer launched by Musk to acquire Twitter, of which he is already the largest individual shareholder with a 9.2% stake. The serial entrepreneur made an offer of $54.20 per share to take over the entire group. He let it be known in passing that it was his best and final offer. Basically, it’s take it or leave it.
Elon Musk built the Musk brand on Twitter where he has nearly 87 million followers and communicates about his various businesses without having to spend a penny on marketing and ads. On Twitter, he developed the image of an iconaclastic disruptor close to the people. But he criticizes the platform for not respecting the principle of free speech.
He therefore hopes to make significant changes by becoming the owner. But to do this, he must convince the shareholders. This is where the problem lies.
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The acquisition plan is meeting resistance. Saudi Prince Alwaleed Bin Talal, one of Twitter’s “largest and long-term shareholders”, said Thursday that Musk’s bid doesn’t come close to matching “the intrinsic value of Twitter given its growth prospects.”
“Being one of the largest & long-term shareholders of Twitter, @Kingdom_KHC & I reject this offer,” Prince Alwaleed Bin Talal said.
Transparency and Human Rights
Musk’s response was immediate. Like a boxer who takes a hit from his opponent, he retaliates with one of his best punches.
“Interesting,” the billionaire said.
He added: “Just two questions, if I may. How much of Twitter does the Kingdom own, directly & indirectly? What are the Kingdom’s views on journalistic freedom of speech?”
It’s true that Prince Alwaleed Bin Talal is not Saudi Arabia’s crown prince Mohammed bin Salman, but he’s member of the royal family.
On the question of transparency and the Kingdom’s stake in Twitter, TheStreet could not obtain official figures. Research on the FactSet data platform does not identify PIF, the sovereign wealth fund of the Kingdom, in the list of institutional shareholders. However, it should be remembered that the FactSet data only covers 57% of Twitter’s ownership.
As for the criticism of journalists’ freedom of expression in the Kingdom, Musk has aimed where it hurts. 81 people were put to death in Saudi Arabia in a mass execution on March 12. Human Rights Watch accused Riyadh of having turned them into criminals when they were only using their freedom of expression.
Saudi Arabia still leads a coalition battling the Iran-backed Houthis, who seized Yemen’s capital of Sanaa in September 2014. The kingdom, which entered the war in Yemen in 2015, has been internationally criticized for its airstrikes killing scores of civilians, AP reported.
Prince Alwaleed Bin Talal has not yet responded to questions asked by Musk.
It should be pointed out that Saudi Arabia and Musk are rivals in the automobile industry. The Kingdom indeed holds more than 60% of Lucid (LCID) – Get Lucid Group, Inc. Report, the manufacturer of ultra luxury electric sedans.
These vehicles — the Lucid Air Pure, Lucid Air Grand Touring, and Lucid Air Grand Touring Performance — are in direct competition with Tesla Model S and Tesla Model S Plaid.