Musk says he could take Tesla private
Elon Musk said he’s considering taking Tesla Inc. private in a radical step that would ease pressure on the money-losing automaker.
The announcement, made via Twitter, stunned investors and sent Tesla’s stock price soaring as much as 8.5 per cent. It followed the news that Saudi Arabia’s sovereign wealth fund had built a less than five-per-cent stake in Tesla worth about US$2 billion.
And yet it also left many questions unanswered, namely how Musk would be able to come up with more than US$50 billion to buy out other shareholders. Factoring in about US$8.8 billion of debt, it would be the largest leveraged buyout in history, surpassing the Texas electric utility TXU in 2007.
The Public Investment Fund, or PIF, acquired shares in Tesla over the last few months as part of its wider investment strategy, according to a person familiar with the transaction. Representatives for the Saudi fund weren’t immediately available for comment on the investment, which the Financial Times first reported earlier Tuesday. A Tesla spokesman declined to comment.
Musk, 47, has a long history of bristling at the amount of scrutiny Tesla endures from investors and media. In an interview with Bloomberg News in January 2015, he spoke of the benefits of running his closely held rocket company Space Exploration Technologies Corp. and his frustrations with having taken Tesla public in June 2010.
“There’s a lot of noise that surrounds a public company and people are constantly commenting on the share price and value,” Musk said in 2015. “Being public definitely increases the management overhead for any given enterprise.”
Taking Tesla private “makes a ton of sense,” said Gene Munster, a managing partner at venture capital firm Loup Ventures.
Tesla shares were halted at 2:08 p.m. and were trading up 7.4 per cent to US$367.25. The rally falling well short of $420 is a sign of market skepticism that Musk taking the company private is possible.