Tesla board confirms it will consider Musk's privatization plan

Muriel Colon
August 8, 2018

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

Tesla's board on earlier on Wednesday said it was evaluating taking the company private, which would be the biggest leveraged buyout of all time.

Tesla's board, a nine-member group that includes Musk's younger brother Kimbal, issued a belated statement Wednesday morning saying Musk had "opened a discussion" last week with the board about the benefits of taking Tesla private.

Musk said on Twitter on Tuesday that he was considering taking the loss-making electric carmaker private at $420 (325.4 pounds) a share, which would value a deal at more than $70 billion. "This included discussion as to how being private could better serve Tesla's long-term interests, and also addressed the funding for this to occur", the statement said.

Public companies have four days to report certain material events that shareholders should know about to the U.S. Securities and Exchange Commission.

Tesla shares fell 2.4 percent to $370.34 on Wednesday after closing up 11 percent on Tuesday.

At $420 apiece, buying all of Tesla's shares would cost about $72 billion, but Morgan Stanley analyst Adam Jonas wrote in a note to investors Wednesday that he expects about $50 billion in additional net debt. The company declined to comment beyond pointing to an all-employee email sent Tuesday by Musk. 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.


At the time of the talks, Tesla was trading at just over $300 a share.

FILE PHOTO: Elon Musk, founder, CEO and lead designer at SpaceX and co-founder of Tesla, speaks at the International Space Station Research and Development Conference in Washington, U.S., July 19, 2017.

"Basically, I'm trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible".

Some on Wall Street shared that view. There are no active talks between the companies now, said the people, who asked not to be identified discussing private deliberations. He said funding was "secured", without elaborating. Tesla did not immediately return a request for comment.

There still are near-term execution risks around ramping up Model 3 production and the ability to generate cash, Jonas believes.

The oil-rich kingdom of Saudi Arabia's investment fund has gobbled up a multibillion-dollar stake in the company in recent months, the Financial Times reported Tuesday, but Tesla has not answered questions about the involvement of the kingdom, or anyone else, in how he would finance the company's exit from public markets.

Other reports by

Discuss This Article

FOLLOW OUR NEWSPAPER