Doubts grow over Elon Musk’s master plan to take Tesla private

Reuters  Rebecca Cook

Tesla Inc said on Wednesday its board is evaluating chief executive Elon Musk's idea of taking the company private after he brought the matter up for discussion last week.

"I suspect the corporate lawyers are scrambling right now and hoping the SEC doesn't go after him and the company, because it could be viewed as a statement from Tesla", Peter Henning, a professor at Wayne State University Law School specializing in securities law, explained to the Detroit Free Press regarding Musk's tweet on Tuesday.

According to Musk, taking the company private would remove the scrutiny from analysts that, he says, encourages short-term thinking. Shares rocketed up 11 percent after Musk's grand reveal Tuesday, with some expecting they would hit $420 - the price Musk had promised shareholders would receive once the company had finalized its go-private transformation.

Taking Tesla private would allow it to focus on revolutionising the automobile industry, Musk believes.

Board members at Tesla are evaluating CEO and Chairman Elon Musk's $72 billion proposal to take the electric vehicle and solar panel maker private.

Public companies have four days to report certain material events that shareholders should know about to the US Securities and Exchange Commission.

"Just because" Musk wants it at $420 "doesn't mean that there aren't other people who might be willing to come in with another transaction that would be more beneficial to shareholders", Pitt said.

Musk has been under intense pressure this year to turn his company into a profitable higher-volume manufacturer, a prospect that has sent Tesla's valuation higher than that of GM. Musk tweeted that he was considering taking the electric vehicle giant private at $420, which implies a 12% premium from where TSLA is trading. That report had already partly lifted Tesla's stock. Bloomberg News, which first reported on that meeting, said the talks failed to progress due to disagreements over ownership. However, they may balk if Tesla becomes even more leveraged and risky in the process of going private.

Mr Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk. In its statement, the board said the company's chief executive had "addressed the funding for this to occur".

Musk, his brother Kimbal and director Steve Jurvetson were not included in the statement from members Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice, and James Murdoch.

He's also Tesla's largest shareholder.

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