Economy

Tesla board evaluating CEO Musk's idea to take company private

Tesla board evaluating CEO Musk's idea to take company private”

Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long term.

The move to take the company public would remove Musk, who himself has a 20 percent stake, from the public arena - and contentious criticism.

Tesla CEO Elon Musk tweeted Tuesday that he's is mulling taking Tesla private at US$420 a share. The talks covered both the reasons for doing so - which Musk also laid out in an email to employees that was subsequently posted online - as well as the funding.

Some Wall Street analysts are skeptical of Musk's ability to gather the financial backing to complete such a deal.

"Finally, this has nothing to do with accumulating control for myself".

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

Musk hasn't been quiet about his disdain for short sellers.

Neither Elon nor Tesla has said yet where it's getting the money to go private.

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. "How could Tesla possibly fund such a large transaction?"

Musk has some sensible reasons for going private.

Tesla directors have said they knew about Elon Musk's surprise proposal to privatise the money-losing vehicle maker before he tweeted about it and have met several times in the past week to discuss the proposal.

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

On Wednesday, Tesla's board said it was evaluating the proposal. "Either way, the future is very bright, and we'll keep fighting to achieve our mission". "The board has met several times over the last week and is taking the appropriate next steps to evaluate this". "And if you stay as a shareholder you get less information than before and you depend more and more on Elon Musk". The move is estimated to require north of $50 billion to buy out the public shareholders. 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.

But the board offered no further details of the proposal or its funding, sparking new questions about the feasibility of the master gambit Musk revealed in a surprise series of midday tweets on Tuesday.



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