Economy

Elon Musk Considering Taking Tesla Private, Has Already Secured Funding

Elon Musk Considering Taking Tesla Private, Has Already Secured Funding

Tesla CEO Elon Musk shocked investors when he tweeted to his 22.3 million followers on Tuesday suggesting the electric auto maker could go private at $420 per share, while noting, "funding secured".

Musk has occasionally griped about the frustrations of running a public company: a year ago he called Tesla a "drama magnet" - and he has vowed not to do an initial public offering for his other major venture, SpaceX, until after regular trips to Mars begin, if ever.

The SEC did not immediately respond to a request for comment on Musk's tweet.

Tesla shares jumped more than 7 per cent to $US367.25 ($A494.94) before halting for news pending.

At that price, the buyout would cost almost $72 billion, based on Tesla's outstanding stock as of July 27, but it's unlikely the deal would cost that much because Musk owns a roughly 20 percent stake in the Palo Alto, California, company.

Musk's tweet came nearly simultaneously with a new report from the Financial Times that revealed for the first time that Saudi Arabia's Public Investment Fund has been quietly buying up about five per cent of the electric vehicle company over the last few months to the tune of $US2 billion ($2.7 billion).

Musk claimed on his personal Twitter account to have secured funding for the maneuver, estimating the per-share valuation of the possible transition at $420.

Saudi Arabia agency stops buying Canadian wheat, barley
Media reports also suggest Saudi Arabia may cancel thousands of scholarships for students attending school in Canada. The arrests last week brought criticism from the Canadian government.

Musk has long raged against short sellers and mentioned his desire to be rid of them as one of his reasons for taking Tesla private. "Funding secured", he said on Twitter.

For current shareholders, Musk said he would institute a provision ensuring that their stock be converted into private shares, adding he would 'ensure their prosperity in any scenario'. But Musk says that's not what he's expecting for Tesla. Because Tesla was "the most shorted stock in the history of the stock market", and quarterly earnings putting "enormous pressure" on the exponentially growing company, Musk suggests it might make more sense to trade stock privately for the time being.

The CEO wrote in a letter to employees Tuesday, revealing that he is genuinely considering moving Tesla off the public stock markets.

Image: Tesla said it met targets to produce 5,000 Model 3 vehicles per week by the end of its second quarter. They would continue to have separate ownership and governance structures. Those who stay onboard would be able to sell shares or execute stock options approximately every six months.

Often, going private means that a single new shareholder-or a small group of them-buys out most of the other shareholders, leading to a company with a small number of owners.

"I wish we could be private with Tesla", he told Strauss. "I own about 20% of the company now, and I don't envision that being substantially different after any deal is completed". Either way, the future is very bright and we'll keep fighting to achieve our mission.


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