Elon Musk says 'considering' taking Tesla private

August 08, 2018 08:38
Elon Musk said on Tuesday that taking Tesla private may be the 'best path forward' for the company. Photo: Reuters

Tesla boss Elon Musk said on Tuesday that he is considering taking the electric carmaker private, and that he has funding for the plan already secured.

"Am considering taking Tesla private at $420. Funding secured," Musk announced on Twitter. He did not disclose the source of the funding, but said "investor support is confirmed."

In a letter to Tesla employees published more than an hour later on the company's blog, Musk said going private would let Tesla "operate at its best, free from as much distraction and short-term thinking as possible," Reuters reports.

However, a final decision is yet to be taken, he said.

Following news of the possible privatization move, Tesla shares closed up 11 percent at US$379.57, slightly below their all-time high.

At US$420 per share, a deal would be worth US$72 billion, making it the largest initiative of its kind, Reuters noted. 

Privatization will help take Tesla out of the glare of Wall Street as the firm goes through a period of rapid growth under tight financial constraints.

Musk has been under intense pressure this year to prove he can deliver on his promise to turn his money-losing company into a profitable higher-volume manufacturer.

Musk owns nearly 20 percent of Tesla. He said in his letter to employees that he did not seek to expand his ownership.

A price of US$420 per share price would represent a nearly 23 percent premium to Tesla’s closing price on Monday, which gave the company a market value of about US$58 billion.

In his letter, Musk suggested a choice for shareholders of selling their shares for US$420 each or remaining investors in a private Tesla.

He said he hopes all current investors would remain were the company to go private. He made no mention in his tweets or his letter of where the funding for a deal would come from.

If Musk were to succeed in taking Tesla private, it would be the largest leveraged buyout of all time, beating the record set by the US$45 billion deal for Texas power utility Energy Future Holdings, which ended in bankruptcy in 2014, Reuters noted.

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