Doubts grow over Elon Musk’s master plan to take Tesla private

Adjust Comment Print

Earlier this week, Tesla CEO Elon Musk announced out of the blue - and on his preferred social media platform - that he was considering taking Tesla private at $420 a share.

Elon Musk has faced a barrage of criticism recently and his electric vehicle company Tesla has been taking a pounding from critics.

Elon Musk's tweets early on Tuesday caused plenty of speculation and controversy.

Tesla posted a new blog to its site, essentially a copy-and-paste of an email Musk sent to Tesla's employees regarding taking the company private again. Musk set a price of $420 a share, substantially above the stock's current trading price and Tesla's all-time closing high of $385 a share.

An acquisition of Palo Alto, California-based Tesla by overseas investors would likely trigger a national-security review by the Committee on Foreign Investment in the U.S. The panel, which has stepped up its scrutiny and blocked some deals lately, could impose conditions, including limits on control of the company and information sharing.

Tesla's CEO also laid out what he envisions as the ideal path for going private.

But as the dust settles on Musk's latest Twitter escapade, questions remain over whether the Tesla chief executive broke SEC guidelines by tweeting the news.

He said that would allow Tesla to "operate at its best, free from as much distraction and short-term thinking as possible".

Musk's proposed move is seen as a strategy to avoid several issues: Wild stock swings, short-sellers who profit on stock value drops and shareholder pressure on quarterly performance, according to the Financial Times.

Names excluded from the board statement were Musk; his brother, Kimbal Musk; and Steve Jurvetson, a venture capitalist and early Tesla backer who's been on leave since previous year.

I drove the regular, 271-hp, rear-wheel-drive Tesla Model 3 a few months ago and liked it.

Shares rose 11 percent Tuesday but fell almost 2 percent at midday Wednesday to $372.38.

Any buy-out would require a shareholder vote. He suggested he did in an initial tweet, but so far Tesla hasn't disclosed any sources of financing, and no one has stepped forward publicly to say they're backing the plan. If the statement regarding having secured the funding for the move later proves unachievable, then Musk could be in hot water with regulators over the statements that he first made on Twitter.

"Just because" Musk wants it at $420 "doesn't mean that there aren't other people who might be willing to come in with another transaction that would be more beneficial to shareholders", Pitt said. 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.

Comments