Published: Wed, August 08, 2018
Money | By Arnold Ball

Tesla board evaluating CEO's bid to take company private

Tesla board evaluating CEO's bid to take company private

By taking Tesla private, Musk believes that the company will be able to sharpen its long-term focus of revolutionizing an automobile industry dominated by fuel-combustion vehicles without having to cater to investors' fixation on how the business is faring from one quarter to the next.

"First, a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best".

Tesla CEO Elon Musk met with SoftBank CEO Masayoshi Son about taking the electric-car maker private a year ago, Bloomberg reports.

Musk tweeted on Tuesday that he had secured funding for the plan, but he has not provided details or evidence, and 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.

On Tuesday, Musk revealed on Twitter that he was considering privatizing the company after taking it public in 2010.

In a letter to shareholders after his tweet on Tuesday, Musk fleshed out his idea, suggesting they would get the option to sell their shares for $420 USA each or remain investors in a private Tesla, out of the glare of Wall Street and its need for quarterly results. "I own about 20 percent of the company now, and I don't envision that being substantially different after any deal is completed", Musk added.

China to put 25% tariffs on $16 billion worth of United States products
The US is also considering further tariffs on another $200bn worth of Chinese goods which could come into effect in September. China has already retaliated with duties of its own, and has pledged to match the U.S. dollar for dollar with new tariffs.

Taking Tesla private would also free Musk from his tumultuous relationship with Wall Street as a whole, which had been consuming a significant portion of his time as well as a significant amount of all news surrounding the automaker.

Musk laid out his reasoning for going private in an email to Tesla employees yesterday, which was subsequently posted on Tesla's website.

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.

The six board members who issued the statement on Wednesday included James Murdoch, chief executive of Twenty-First Century Fox Inc. and Brad Buss, who was the chief financial officer of solar panel maker SolarCity until it was bought by Tesla in 2016.

Any buy-out would require a shareholder vote. "This is out there, even for Tesla", analysts with Barclays wrote Wednesday.

Tesla shares fell 2.4 percent to $370.34 on Wednesday after closing up 11 percent on Tuesday. Many initially thought it was Elon Musk's attempt at a bad joke about marijuana, because "420" has always been associated with pot. Korus said he would need more details from Musk to judge whether a buyout offer would be practical and at what price it would be attractive. The move is estimated to require north of $50 billion to buy out the public shareholders.

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