Elon Musk says he would have sold SpaceX stock to take Tesla private

Elon Musk speaks near a Falcon 9 rocket during his announcement that Japanese billionaire Yusaku Maezawa will be the first private passenger to fly around the moon aboard the SpaceX BFR launch vehicle.

DAVID MCNEW | AFP | Getty Images

Elon Musk told a federal court in San Francisco on Monday that he could have sold shares of SpaceX to take with him Tesla private in 2018. He was then, and still is, the CEO and largest shareholder of both companies.

Musk is being sued by Tesla shareholders for a series of tweets he wrote in August 2018 saying he had “secured the funding” to take the automaker private at $420 a share, and that “investor support” for such a deal was “confirmed”. Trading in Tesla was halted following his tweets and the share price remained volatile for weeks.

The shareholders in the certified class action lawsuit allege that Musk’s tweets were reckless and false, and that relying on his statements to make investment decisions cost them significant amounts of money.

Musk would later claim that he had a verbal commitment from Saudi Arabia’s sovereign wealth fund and was confident the funding would come through at his proposed price based on a handshake. However, the deal never materialized.

During his second day on the witness stand, Musk claimed that another reason he said he had “funding” for a 2018 deal was that he could have sold shares of SpaceX, a U.S. defense contractor and satellite internet company he also owns. runs. , to finance the transaction.

Musk said under oath, “SpaceX stock alone meant ‘funding secured’ in itself. It’s not that I want to sell SpaceX stock, but I could have, and if you look at the Twitter transaction — that’s what I did. I sold Tesla stock to complete the Twitter transaction. And I would have done the same here.”

Musk did not say how many shares in his reusable rocket maker he could have sold, to whom and at what price to fund the Tesla takeover.

In April 2018, SpaceX said in a Securities and Exchange Commission filing that it had raised approximately $214 million as part of a funding round in which it was seeking more than $500 million in total equity funding.

A shareholder attorney, Nicholas L. Porritt of Levi & Korsinsky, asked Musk if the price he was proposing for Tesla stock was a joke, since 420 is a pop culture reference to cannabis.

Musk insisted this was a coincidence. He said, “There’s some, I think, karma around 420… I’d have to wonder if that’s good or bad karma right now.”

This isn’t the first lawsuit Musk has faced over his tweets. The SEC charged Musk and Tesla with civil securities fraud shortly after sending them, and they paid separate $20 million fines to the federal agency to settle the charges. They later signed a revised consent decree that required Musk to temporarily relinquish his role as chairman of the board at Tesla, and allow a veteran securities attorney to tweet tweets containing important business information about Tesla before publishing them.

Musk recently became the CEO of the social media company Twitter after leading a $44 billion leveraged buyout of the company in October 2022. Saudi Prince Alwaleed bin Talal bin Abdulaziz is the social media company’s second largest shareholder after Musk. Last November, Senator Chris Murphy, D.-Conn, sent a letter to the United States Committee on Foreign Investment asking for a review of the financing of the Musk-Twitter deal.

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