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Investors to get their say after Musk scuttles Tesla buyout

28 August, 2018, 18:11 | Author: Kristi Dunn
  • Elon Musk Abandons Plan to Take Tesla Private Two Weeks After Bombshell TweetMore

Founder and CEO of Tesla Motors Elon Musk speaks during a media tour of the Tesla Gigafactory, which will produce batteries for the electric carmaker, in Sparks, Nevada, U.S. July 26, 2016.

In a blog post Friday, the billionaire entrepreneur declared "most of Tesla's existing shareholders believe we are better of as a public company".

The Wall Street Journal reports that sentiment ran deeper, noting that at least one board member cheered when Musk announced that he would withdraw the proposal to go private. The bold tweet sent Tesla's stock skywards but it also drew intense scrutiny.

Such a deal would likely have strings, such as investors wanting a say in the company. "W$3 ith every blog post and with every statement since his initial tweets we have seen admissions from Mr. Musk that basically there was no reasonable basis to believe his tweets were true".

Musk tweeted August 7 he was considering taking Tesla private and that funding had been secured.

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Such a petition was being compiled, according to local media, although it remained unclear how many signatures he had gathered. He also said: "I made it very clear that I believe former Prime Ministers are best out of the Parliament".

Well, turns out that deal was not exactly done, the funding far from secured. "Public companies need more details about these things and you can't make them up". Was it the advice of equity firm Silver Lake, or investment juggernaut Goldman Sachs? Banks had at most just a couple of weeks to assess the situation, after being brought in to advise only after Musk's initial tweet, said the people, who asked not to be identified as the details aren't public.

Shares of Tesla are slipping on the first day of trading after the electric vehicle maker said it won't consider going private after all.

"Eventually this will blow over, but it's going to take at least six months", analyst Gene Munster of Loup Ventures said by phone Saturday.

With Musk's idea for a buyout backed by Saudi Arabia's sovereign wealth fund now off the table, attention was zeroing in on Tesla's efforts to become profitable, its cash reserves and what steps Musk could take to raise fresh capital. "And now Tesla needs to get back to basics, which is ramping Model 3 production and profitability". Coffee noted that the SEC may feel as though these disclosures were deficient. Musk's exhaustion, which the CEO described in a New York Times interview, is the "most critical near-term concern".

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