Tesla board forms independent group to explore going private

Alicia Cross
August 15, 2018

Musk announced last week on Twitter and on Tesla's website that he was considering taking automaker Tesla private and had secured the funding to do so.

Musk said in the blog post that the Saudi fund had offered to take Tesla private multiple times, beginning early previous year, with the goal of diversifying their investments away from oil.

This move comes after a meeting that the board urged Mr. Musk and his brother Kimbal to abstain from, in which it considered the CEO's tweets about going private. Reports that it would cost US$70 billion to take Tesla private, Musk said, were a stretch, adding that it would actually cost less than that. Tesla is the most shorted stock in the U.S. Musk has not hidden his contempt of short sellers in the past.

"Despite Elon Musk's frustration with being a public company, I think there are more advantages to remaining public", said CFRA analyst Efraim Levy, citing cheaper access to capital and media exposure due to interest in a public company.

Meanwhile, Musk faces scrutiny of his tweet on secured funding.

If and when Musk presents a plan to take Tesla private, the special committee has the authority to negotiate the transaction and ultimately to approve it, the company said.

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"I continue to have discussions with the Saudi fund, and I also am having discussions with a number of other investors, which is something that I always planned to do since I would like for Tesla to continue to have a broad investor base", he said. Silver Lake declined to comment.

The special committee is composed of Brad Buss, Robyn Denholm and Linda Johnson Rice.

The committee, made up of three independent directors, said Tuesday that it has not received any formal proposal from Musk. The company appears to be playing catch-up with Musk's assertions about the momentum behind a deal, highlighting the speed at which the proposed transaction is unfolding.

Buss is the former chief financial officer of SolarCity, Musk's renewable energy company. Denholm is the chief operating officer of Telstra, a telecommunications company.

One director, Steve Jurvetson, is now on leave of absence.

Musk, 47, touched off the process a week ago with a highly unconventional announcement of an effort to take a company off the public markets and has been drip-feeding details in tweets and blog posts that have preempted the board. Wilson Sonsini Goodrich and Rosati will be legal counsel for Tesla itself.

Other reports by Free-Prsite

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