Elon Musk says to take Tesla privately

Tesla CEO Elon Musk said Tuesday that he wants to take the company privately at $ 420 per share.

“Considering taking Tesla privately at $ 420. Funding secured,” Musk first said via Twitter before issuing a formal statement on the company’s website.

Musk said in the statement that a shareholder’s voice must be held before a final decision is made. But he said in a tweet that investment support was confirmed .

Taking the company privately is “the best way forward,” says Musk in the statement. He said the pressure to be a public company creates distractions and promotes short-term thinking that may not give the best decisions in the long run.

“I believe that we are the best when everyone is focused on implementing when we can be focused on our long-term mission and when there are no perverse incentives for people to try to harm what we are all trying to reach, “he said.

Musk also said via Twitter that he would not expect a voting vote if the company went privately and would not sell Tesla shares. He admitted that he would be the CEO of the company.

“I do not have a voting vote now and do not expect any shareholder to have one if we go privately. I will not sell in any scenario,” he said .

Musk added that Tesla will create a “special purpose fund” if the company goes privately so current Tesla shareholders can keep their investments in the company. He said that new investors would be able to buy stocks around once every six months.

“My hope is * all * Current investors remain with Tesla, even if we are private. Should create a special fund that will allow anyone to stay with Tesla. This is already done with Fidelity’s SpaceX investment,” he says. ].

Tesla has been public since 2010. The company had a market value of over SEK 60 billion, starting Tuesday. The stock price reached as high as $ 371.15 per share after Musk’s tweet. It was about $ 361 in the early afternoon trading.

Musk has said he would like to take Tesla privately earlier.

“I wish we could be private with Tesla,” says Musk in an interview with Rolling Stone published in November 2017. “It actually makes us less effective being a public company.”

Musk has also said on several occasions that Tesla will be profitable by the end of this year and will not need to get additional funds despite the increased cash flow rate in recent quarters.

At the end of June, Tesla achieved its goal of making 5,000 model 3 sedan cars in one week. Musk said earlier that the company would beat that number by the end of 2017, and maintaining such a production speed is crucial for Tesla to be profitable.

The Financial Times reported Tuesday that Saudi Arabia’s sovereign wealth fund has acquired a $ 2 billion stake in the company. The fund owns between 3% and 5% of Tesla’s total share, which means that the shares are likely to be worth between $ 1.7 billion and $ 2.9 billion.

You can read the entire Epost Musk sent to Tesla employees on Tuesday.

Earlier today, I announced that I am considering taking Tesla privately at a price of $ 420 / share. I wanted to let you know my rationale for this, and why I think this is the best way forward.

First, a final decision has not yet been taken, but the reason for this is to create an environment for Tesla to work best. As a public company, we are subject to wild fluctuations in our share price, which can be a major distraction for all those who work at Tesla, all of which are shareholders. Being public also affects us in the quarterly profit cycle, which places tremendous pressure on Tesla to make decisions that may be right for a particular quarter, but not necessarily right in the long term. Finally, as the shortest share in the stock market history, it is public that there are a large number of people who have an incentive to attack the company.

I believe that we are the best when everyone is focused on implementing when we can focus on our long-term mission and when there are no perverse incentives for people to try to harm what we all try to achieve.

This is especially true of a company like Tesla, which has a long-term forward-looking mission. SpaceX is a perfect example: it is far more operational efficiently, and it is largely due to the fact that it is privately owned. This does not mean that it will be meaningful for Tesla to be private in the long term. In the future, when Tesla enters into a phase of slower, more predictable growth, it is likely to make sense to return to the public markets.

Here’s what I consider to be private would mean to all shareholders, including all our employees.

First, I want to structure this so that all shareholders have a choice. Either they can hold investors in a private Tesla or they can be bought at $ 420 per share, which is a 20% premium above the Q2 result call (which had already increased by 16%). My hope is that all shareholders will remain, but if they prefer to be bought out, that could happen with a good prize.

Secondly, I intend that all employees in Tesla will be shareholders in the company, as is the case with SpaceX. If we were to go privately, employees would still be able to periodically sell their shares and exercise their options. This would allow you to still share in the growing value of the company that you have worked so hard to build over time.

Third, the intention is not to merge SpaceX and Tesla. They would continue to have separate ownership and governance structures. However, the structure that Tesla predicts is similar in many ways to the space structure: external shareholders and employee shareholders have the opportunity to sell or buy approximately every six months.

Finally, this has nothing to do with accumulating control for myself. I now own about 20% of the company, and I do not consider it to be significantly different after an agreement has been concluded.

In principle, I try to achieve a result where Tesla can work best, free from as much distraction and short thinking as possible, and where there is such a small change for all our investors, including all our employees, as possible.

This proposal to go privately would ultimately be completed by voting by our shareholders. If the process ends as I expect it to come, a private Tesla would ultimately be a huge opportunity for all of us. However, the future is very bright and we will continue fighting to achieve our mission.

Thank you Elon

This is a developing story. Check back for updates.

Do you have a Tesla news tip? Contact this reporter at mmatousek@businessinsider.com.


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