Published: Wed, August 08, 2018
Money | By Bruce West

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

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

The statement says Musk "addressed the funding for this to occur" in the conversations.

Midway through the trading session in NY on Wednesday, Tesla shares were down 5% at $374 after surging 11% on Tuesday. "Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company". That said, if they do want out, they can sell their shares at $420 per share, which is a fair bit higher than Tesla's current stock price ($382.67 at the time of writing, up from today's open price of $343.84).

Tesla Inc.'s board confirmed it knew last week about Elon Musk's proposal to take the electric-car maker private, adding credence to the idea that this was more than a spur-of-the-moment whim from the notoriously impulsive billionaire.

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.

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

"Who gives $30 to $50 billion to buy back the shares?" asked NordLB analyst Frank Schwope.

Some on Wall Street shared that view.

Two of the potential stumbling blocks to Musk's plan include the stock price premium not being enough to get the existing shareholders on board to support the sale and coming up short on the announced funding to complete the transition. 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. Musk proposed a structure that would have given him disproportionate control over the company through stock with supervoting rights, one person said. He now owns 20 percent of the company, so more than $60 billion is needed to buy the business from public shareholders. Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk.

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. Rather, it was attributed to Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice, and James Murdoch. Tesla's other board members are Musk, his brother Kimbal Musk and venture capitalist Steve Jurvetson.

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