Tesla shares frozen as Musk plots to buy it back

SHARES in Tesla were suspended last night after Elon Musk threatened to take the electric car maker private in a Twitter outburst.

Musk, 47, tweeted he was looking at taking Tesla off the public market if its shares kept climbing, in a huge change of course for the firm.

‘Am considering taking Tesla private at $420. Funding secured,’ he said.

The tweet sparked a frenzy of speculation about the maverick boss’s intentions - with some users at first asking if his account had been hacked.

Shares were suspended at 2.10pm New York time pending further news after the firm’s stock jumped 7.3pc on the day to $366.94, adding £657m to Musk’s 20pc stake.

In a later letter to employees, Musk said any privatisation of Tesla would be finalised through a shareholder vote.

He said: ‘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.

‘If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us.’ The boss added he has support from investors, although he provided no evidence for this claim.

The tweets are likely to be closely examined by the Securities and Exchange Commission, the US watchdog, which monitors market manipulation rules. Harvey Pitt, former SEC chairman, told CNBC: ‘His mere statement on social media is not per se a violation of SEC rules, but what could be a violation is if it is designed to boost the market price of the stock. The use of a specific price for a potential going private transaction is highly unprecedented and therefore raises significant questions about what his intent was, so that would have to be investigated.’

A deal at $420 per share represents a 22.8pc premium to Tesla’s closing price on Monday, valuing the company at about £56bn.

Musk’s tweet - released at a time when flight data suggested the billionaire’s private jet was airborne - came after Saudi Arabia’s sovereign wealth fund built up a stake of between 3pc and 5pc in Tesla, according to the FT. The stake is equivalent to between £1.5bn and £2.4bn at the company’s current share price. Musk also said he was unlikely to sell off his own stake if the company went private.

Asked on Twitter whether he would sell Tesla outright, Musk said: ‘I don’t have a controlling vote now and wouldn’t expect any shareholder to have one if we go private. I won’t be selling in either scenario.

‘My hope is all current investors remain with Tesla even if we’re private.’ Musk added he would create a special fund allowing public investors to stay, similar to one used by his rocket launching business SpaceX.

The Tesla boss has already expressed his preference for running a private company. Last year Musk said he would prefer if he ‘could be private with Tesla’, adding ‘it actually makes us less efficient to be a public company’.

Musk also told Twitter he would introduce a provision for retail investors so they did not lose out if the company went private.

Musk added that he planned to stay on as chief executive under private ownership.

Shares resumed trading at 3.45pm in New York and closed up 11pc at $379.57, valuing the business at £49.4bn.