Published: Wed, August 08, 2018
Economy | By

Tesla board says Musk started going-private talks last week

Tesla board says Musk started going-private talks last week

The statement, issued by six of Tesla's nine-member board, suggests Musk's controversial tweets, which led to the company's stock being suspended from trading for a time on Tuesday, were less spontaneous than originally believed and not designed simply to punish Tesla stock short-sellers.

They said this "included discussion as to how being private could better serve Tesla's long-term interests". The board, they said, had met "several times" over the last week and was actively working to "evaluate" the proposal.

The most obvious equity partners for Musk would be a sovereign wealth fund such as Saudi Arabia's Public Investment Fund (PIF), which sources said on Tuesday had taken a stake of just below 5 percent in Tesla, or a major technology investment fund such as SoftBank Group Corp's Vision Fund, bankers said.

Several securities attorneys told Reuters that Musk could face investor lawsuits if it was proven he did not have secure financing at the time of his tweet.

Shares skyrocketed the day before, after CEO Elon Musk tweeted he was considering taking the company private and had "funding secured". But after the markets opened Wednesday morning, Tesla's stock edged downward about 1 percent, to $375.

Musk mused Tesla could be bought back at $420 per share.

Most analysts were skeptical, but some said a deal could materialize if Musk succeeded in lining up the right funding.

Neither Elon nor Tesla has said yet where it's getting the money to go private. And as the stock price has climbed this year, so too have the bets against it. Tesla is a legendary cash-burner, with roughly $10 billion in debts and $2 billion in reserves, and Musk would probably need in the tens of billions of dollars to buy out shareholders at the right price. "This is out there, even for Tesla", analysts with Barclays wrote Wednesday.

Six members of Tesla's board of directors issued a statement Wednesday, acknowledging that discussions have been ongoing since last week about going private. Company share prices, particularly in deals as giant as this one, are nearly always decided by corporate executives, board members or consultants who review market data and optimize for maximum value.

Musk holds "about 20 percent of the company now", the statement said, and made clear that he doesn't see that changing whether Tesla is private or public.

Like this: