Tesla board says Musk started going-private talks last week

Lloyd Doyle
August 8, 2018

Tesla Inc Chief Executive Officer Elon Musk'splan to take the electric vehicle maker private raised doubts among Wall Street analysts about the billionaire' s ability to gather enough financial backing to complete the deal.

In a statement on Tesla's website on Wednesday, six of Tesla's nine directors said the board had met several times over the last week to discuss the idea and was "taking the appropriate next steps to evaluate this".

Tesla said on Wednesday the discussions had addressed the issue of how to fund such a deal, but gave no details.

The Tesla board responded to the proposal earlier Wednesday morning, indicating that it is evaluating things.

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.


"Distraction or not, the move feels right even if Musk is downplaying how supportive public markets have been".

Tesla shares fell as much as 3.4 per cent to US$366.52 before the start of regular trading, though they pared declines after the board statement.

Cowen analyst Jeffrey Osborne told clients in a note Wednesday that he didn't believe Tesla's current business "support a valuation anywhere close to $420 per share". In his first tweet he said funding was secured but provided no details. Among these issues, short-sellers have especially posed a continuous problem for Tesla, and it's no surprise Musk would like to put an end to the roller coaster that their actions can cause, with him highlighting the view that Tesla is one of most shorted companies on Wall Street. That last part is important, because Tesla's going to need a lot of it. "And if you stay as a shareholder you get less information than before and you depend more and more on Elon Musk". Musk's money-losing and cash-burning company is an unlikely candidate for debt investors to be willing to help go private.

"Last week, Elon opened a discussion with the board about taking the company private", the board members wrote.

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.

Other reports by Iphone Fresh

Discuss This Article

FOLLOW OUR NEWSPAPER