Home / Motor/ Tesla CEO Musk drops pursuit of $72 b take-private deal

Tesla CEO Musk drops pursuit of $72 b take-private deal


Comments / {{hitsCtrl.values.hits}} Views / Monday, 27 August 2018 00:00


Reuters - Tesla Inc Chief Executive Elon Musk said late on Friday he would heed shareholder concerns and no longer pursue a $72 billion deal to take the luxury electric car maker private, abandoning an idea that stunned investors and drew regulatory scrutiny.

The decision to leave Tesla as a publicly listed company raises new questions about its future. Tesla shares have been trading well below their 7 August levels, when Musk announced on Twitter that he was considering taking Tesla private for $420 per share, as investors wondered what this meant for Musk’s ability to steer the company to profitability.

Musk and Tesla also face a series of investor lawsuits and a U.S. Securities and Exchange Commission investigation into the factual accuracy of Musk’s tweet that funding for the deal was “secured.”

Musk said on Friday that his belief that there is more than enough funding to take the company private was reinforced during the process, but said he abandoned the bid based on feedback from shareholders and because the effort was proving to be more time-consuming and distracting than anticipated.

“Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don’t do this,’” Musk wrote in a blog post.

Musk, who owns about a fifth of Tesla, said previously that he envisioned taking the company private without the standard method of a leveraged buyout, in which all the other shareholders would cash out and the deal would be funded primarily with new debt.

Musk estimated that two-thirds of Tesla shareholders would have chosen an option of “rolling” their stakes into a private company. That would significantly reduce the amount of money needed for the deal and avoid further burdening Tesla, which has a debt pile of $11 billion and negative cash flow.

However, Musk said on Friday that a number of institutional shareholders explained that they have internal compliance issues that limit how much they can invest in a private company. He also said there was no proven path for most retail investors to own shares were Tesla to go private.

That contrasts sharply with an 7 August  tweet, when Musk said: “investor support is confirmed.”

 


Share This Article


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

The fish that swallowed the whale

Friday, 16 November 2018

This is an easy-peasy, elementary effort of an ordinary citizen to comprehend the mad scramble for power among the political class. It is undertaken in the belief that the crisis we face is an opportunity to reject the family kleptocracy of Mahinda R


Courting democracy; Housing disaster?

Thursday, 15 November 2018

A small step was taken by a sovereign court the day before yesterday. It was a giant leap for the supremacy of the Constitution over all three arms of government in a recently benighted Sri Lanka. As well as being the tangible proof of intra-governme


Sri Lanka’s Judiciary in its finest hour

Thursday, 15 November 2018

“We must never forget that the only real source of power we as judges can tap is the respect of the people” –Justice Thurgood Marshall


When scholars turn slayers of reason

Thursday, 15 November 2018

“… I think, that the intellectual is an individual endowed with a faculty of representing, embodying, articulating a message, a view, an attitude, philosophy or opinion to, as well as for, a public. And this role has an edge to it, and cannot be


Columnists More