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Musk says he’s working with Silver Lake, Goldman to take Tesla private

Elon Musk

Elon Musk continued to drip-feed details of his controversial plan to take Tesla Inc. private, saying late Monday that he's getting advice from Goldman Sachs Group (GS) and private equity firm Silver Lake.

In a tweet late Monday California time, the electric car maker's chief executive officer said he's also lined up legal advisers for the possible transaction. A Tesla spokesman said Mr. Musk's tweet refers to his own advisers and attorneys. Tesla board members didn't immediately respond to requests for comment.

Controversy has swirled around Mr. Musk's plan since the moment he announced it in a tweet a week ago, with some investors and lawyers questioning his claim to have secured funding for the move. Mr. Musk's tweet about taking Tesla private hadn't been cleared ahead of time with the company's board, the New York Times reported, and the Securities and Exchange Commission is scrutinizing his statements.

Earlier Monday, Mr. Musk revealed that Saudi Arabia has long been interested in taking Tesla private, which gave him the confidence last week to tweet that he was considering the blockbuster deal. He also confirmed the country's Public Investment Fund recently bought an almost 5% stake and is interested in helping take Tesla private, as Bloomberg News reported Sunday.

The posts prolong Mr. Musk's piecemeal approach to explaining how he'll pull off a privatization of his money-losing automaker at a more than $70 billion market capitalization. Since the 47-year-old dropped that bombshell, he's used social media to sporadically update investors stuck in an information vacuum.

Silver Lake, with California offices in Menlo Park, Cupertino and San Mateo, has plenty of experience of helping take companies private. It partnered with Michael Dell in 2013 on the $24.4 billion deal to acquire his namesake computer company, contributing $1 billion of cash to the transaction. The technology-focused firm also participated in Dell Inc.'s $67 billion purchase of EMC Corp. in 2015. The same year, it agreed to take enterprise software maker SolarWinds Inc. private with Thoma Bravo in a deal valued at about $4.4 billion. Each of those transactions, however, involved the firm making an equity commitment to help fund the deal.

Saudi Arabia's sovereign wealth fund first approached Mr. Musk in early 2017 about taking Tesla off the market, he said in a blog post Monday. The Public Investment Fund is working to be part of any investor pool that emerges to take Tesla private, Bloomberg News reported on Sunday.

Mr. Musk described a meeting late last month in which a managing director for the fund expressed regret that such a transaction hadn't moved forward. "I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving," Mr. Musk wrote, adding that this is why he tweeted on Tuesday that he had "funding secured" to take Tesla private at $420 a share.

As Mr. Musk fills in the blanks, he's not convincing everyone. Sydney-based Totus Capital is still short Tesla shares and has increased its bearish bet since the executive tweeted about taking the company private, said Ben McGarry, a fund manager at the firm.

"The time has finally come for the great Tesla short," Mr. McGarry said in a note last week. "When a CEO under extreme pressure lobs a light-on-detail privatization proposal, the potential payoff for a short position improves."

Shares of Tesla have gained 4.2% since Aug. 6, the day before Musk first revealed his buyout proposal. Still, the shares are well below the $420 level at which he said existing shareholders could be bought out, underscoring investor skepticism that the CEO will be able to fund the transaction.

Several investors have sued Mr. Musk and Tesla, claiming the company's share price was manipulated. The SEC is said to be intensifying its scrutiny of the company and its CEO after having started gathering general information about Tesla and Mr. Musk's earlier public pronouncements about manufacturing goals and sales targets.

The law firms Musk said he is working with are Wachtell, Lipton, Rosen and & Katz, and Munger, Tolles & Olson.