Here's what taking Tesla private means for the company and Elon Musk

Here's what taking Tesla private means for the company and Elon Musk

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.

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

The agency declined to comment and Tesla did not immediately respond to requests for comment.

Compliance experts are still arguing about whether Musk could face official censure.

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

Tesla CEO Elon Musk met with SoftBank CEO Masayoshi Son about taking the electric-car maker private previous year, Bloomberg reports.

Musk proposed offering shareholders a stock buyback at $420 per share, or 20 percent higher than the price at the end of the company's second-quarter earnings call, though he also pointed out that the price has risen 16 percent since, limiting this offer's attractiveness to shareholders.

"If Apple wanted to be in the auto business, this is how you do it-you step up, doesn't have to be $420 (per share), it could be another price".

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Musk also said he intends to give Tesla's existing shareholders the option of retaining a stake in the company through a special fund if they want to stay invested.

The facility, which is expected to cost around US$5 billion, is seen as key to Musk's vision of tapping the Chinese market and finally making Tesla profitable.

Just last week, he revealed he had been working 110 hours a week to deliver on short-term promises he had made to Wall Street, a load he traced to his boorish behaviour toward two analysts earlier this year. However, they may balk if Tesla becomes even more leveraged and risky in the process of going private. Korus said he would need more details from Musk to judge whether a buyout offer would be practical and at what price it would be attractive.

There is no evidence this was Musk's intention with his remarks on Tuesday.

There still are near-term execution risks around ramping up Model 3 production and the ability to generate cash, Jonas believes.

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

Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk. Elon Musk's net worth is tied directly to Tesla's stock price, and according to the Bloomberg Billionaire Index, he theoretically made $1.43 billion on the day.

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