4 Firms Handling Elon Musk's Effort to Take Tesla Private
Wachtell; Munger Tolles; Latham & Watkins; and Wilson Sonsini are advising on a bid to take the electric car maker private. Paul Weiss has also been hired by Tesla's board to advise on an SEC inquiry.
August 14, 2018 at 07:04 PM
5 minute read
Tesla Inc. founder Elon Musk said he's working with Wachtell, Lipton, Rosen & Katz and Munger, Tolles & Olson to move forward his proposal to take the electric car maker private. Meanwhile, Tesla's board of directors has also retained Wilson Sonsini Goodrich & Rosati and Latham & Watkins to evaluate the chief executive's bid.
After facing a series of questions over possible funding sources for such an effort, Musk has signaled that he remains serious about pursuing the potential buyout, announcing via Monday evening tweet that he is working with financial advisers from The Goldman Sachs Group Inc. and private equity firm Silver Lake Partners, with Wachtell and Munger Tolles serving as outside legal advisers on the proposal.
I'm excited to work with Silver Lake and Goldman Sachs as financial advisors, plus Wachtell, Lipton, Rosen & Katz and Munger, Tolles & Olson as legal advisors, on the proposal to take Tesla private
— Elon Musk (@elonmusk) August 14, 2018
Wachtell and Munger Tolles have not confirmed the names of the lawyers advising Musk on such a deal. Wachtell corporate partners David Karp and Ronald Chen in New York led a team from the firm that counseled Musk and Tesla two years ago on the Palo Alto-based company's merger with SolarCity Corp., another entity that Musk already controlled. (Karp and Chen also just advised Arlo Technologies Inc., a smart security spinoff from Netgear Inc., on a $163 million initial public offering earlier this month that generated $5 million in legal fees and expenses for Wachtell, according to securities filings.)
Monday's announcement appears to be the latest effort by Musk to convince investors, as well as the U.S. Securities and Exchange Commission, that he is keen on his $72 billion plan to take Tesla private. Musk's tweet last week about having “funding secured” for a possible buyout has triggered investor suits and an investigation by the SEC into the accuracy of his public statements.
Tesla's board, which said it hasn't yet received a formal going-private proposal from Musk, said in a securities filing Tuesday that it has created a special committee to evaluate any offer from its CEO. Three independent directors—Brad Buss, Robyn Denholm and Linda Johnson Rice—are being advised by Latham and will retain an independent financial adviser once the board receives an official proposal.
“No assurances can be given regarding the likelihood, terms and details of any proposal or potential going private transaction,” the trio of independent directors said in a statement, which noted that the special committee has to “have the full power and authority” to evaluate and negotiate any potential transaction to take Tesla private.
Wilson Sonsini, a firm that has enjoyed a long relationship with Tesla and other Musk-related entities, is advising the company's board itself. The Recorder reported in 2009 on Wilson Sonsini senior and founding partner Larry Sonsini stepping down from his role on Tesla's board to serve as primary outside counsel to the board instead. Paul, Weiss, Rifkind, Wharton & Garrison has also been retained by Tesla's board to advise it on the SEC inquiry into Musk's public comments, according to news reports.
In a blog post Monday, Musk explained that by taking Tesla private, he would eliminate the influence of short sellers, as well as the demands of reporting quarterly earnings. Going private, he wrote, will “enable Tesla to operate at its best, and advance our mission of accelerating the transition to sustainable energy.“
Musk claimed that he had been approached several times during the past two years by Saudi Arabia's sovereign wealth fund about support to take Tesla private, which is why he wrote “funding secured” in a tweet last week.
“Going back almost two years, the Saudi Arabian sovereign wealth fund has approached me multiple times about taking Tesla private,” Musk wrote. “Recently, after the Saudi fund bought almost 5 percent of Tesla stock through the public markets, they reached out to ask for another meeting. That meeting took place on July 31. … I left the July 31 meeting with no question that a deal with the Saudi sovereign fund could be closed.”
Musk said he is also seeking additional outside investors. Meanwhile, any detailed proposal would be presented to the special committee of Tesla's board for final evaluation, he added.
In an odd twist, on Monday the rapper Azealia Banks, who claims to have been invited to Musk's home over the weekend along with the musician known as Grimes, said that Tesla's CEO was “scrounging for investors to cover his ass after that tweet.”
Banks, however, has a history of making bold and sometimes unverified claims. Musk, through Tesla, said he had never met Banks and called her claims “complete nonsense.”
Tesla's general counsel is Todd Maron, who once served as Musk's divorce lawyer.
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