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

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

The most obvious equity partners for Musk would be a sovereign wealth fund such as Saudi Arabia's Public Investment Fund (PIF), which sources said on Tuesday had taken a stake of just below 5 percent in Tesla, or a major technology investment fund such as SoftBank Group Corp's Vision Fund, bankers said.

China's Tencent Holdings Ltd (0700.HK), which took a 5 percent stake in Tesla previous year, could also be a possible partner.

Musk's plan to take Tesla private would give all shareholders the option to stay as investors in the now-private company or to sell their shares at $420 per share, which represents a premium of about 20 percent based on the stock price during the second quarter earnings call at the end of June.

Tesla Inc. (TSLA) CEO Elon Musk's surprise announcement that the electric carmaker might be taken private at a significant premium to its current market price is exciting many stock investors with the prospect of huge profits.

Elon Musk's net worth has surged since he raised the possibility of taking Tesla private.

Names excluded from the board statement were Musk; his brother, Kimbal Musk; and Steve Jurvetson, a venture capitalist and early Tesla backer who's been on leave since previous year.

A2018 Model 3 sedan sits next to a Model X on display outside a Tesla showroom in Littleton Colorado. Board members at Tesla are evaluating CEO and Chairman Elon Musk’s $70 billion proposal to take the electric car and solar panel maker private. Pictur
Tesla board evaluating CEO Musk's idea to take company private

Going private is one way to avoid scrutiny by the public market as Musk and the company tackle those challenges.

FILE PHOTO: Elon Musk, founder, CEO and lead designer at SpaceX and co-founder of Tesla, speaks at the International Space Station Research and Development Conference in Washington, U.S., July 19, 2017.

'Basically, I'm trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, ' Musk wrote. "How could Tesla possibly fund such a large transaction?" It was pretty quick and seemed to handle well enough. However, they may balk if Tesla becomes even more leveraged and risky in the process of going private.

Any buy-out would require a shareholder vote.

On Wednesday, Tesla's board said it was evaluating the proposal. The move is estimated to require north of $50 billion to buy out the public shareholders. The stock is far below the $420 price at which Musk said shareholders would be bought out. If the statement regarding having secured the funding for the move later proves unachievable, then Musk could be in hot water with regulators over the statements that he first made on Twitter.

The big question, of course, is whether Musk's tweet was accurate-particularly whether it's true that he has "funding secured".




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