Tesla shares soar after Elon Musk floats plan to take company private

If Tesla were taken private at $420 per share, it would be one of the largest such transactions in history

By Redacción MNN Wednesday, August 8, 2018 comments

Elon Musk announced on Tuesday that he is considering taking Tesla private using a series of provocative tweets, a suspension (and resumption) of trading in the company’s shares, reports of a significant Saudi investment, a surge in stock price, and an evocative, Musk-tinged appeal to the Tesla faithful: “The future is very bright and we’ll keep fighting to achieve our mission.”

The tweet appeared to be triggered by a report in the Financial Times that Saudi Arabia has built up a stake in Tesla worth up to $2.9bn.

Mr. Musk said de-listing from the stock exchange meant Tesla would no longer be pressured into making short-term decisions to appease investors.

While Twitter was an unconventional way to make the announcement, the US market regulator, the Securities and Exchange Commission, allows firms to use social media outlets like Facebook and Twitter in this way provided investors have been told which social media outlets will be used.

However, it was unclear whether Mr. Musk had done this. Both the SEC and Nasdaq failed to respond to requests for comment.

Mr. Musk said however that investors backed the plan which requires a shareholder vote.

He said shareholders would be offered $420 per share – around a fifth higher than the current price.

Tesla shares ended the day 11% higher at almost $380 per share – close to their all-time high.

Trading in the shares was initially suspended after Mr. Musk’s tweets – pending a more formal announcement.

Mr. Musk, who owns almost 20% of the company, said he hoped the move would shield the firm from distracting swings in the share price and the pressure to meet quarterly financial targets.

He also said he wanted to end “negative propaganda” from short sellers, investors who bet on the shares of a firm going down.

“Basically, 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,” he wrote.

Mr. Musk has discussed the drawbacks of being a public company before. But his tweets stirred confusion initially, given his history of informal use of the social media service.

If Tesla were taken private at $420 per share, it would be one of the largest such transactions in history – a deal worth more than $80bn, including the firm’s debt.

Mr. Musk’s plan would allow investors to choose to retain their holdings. He planned to hold onto his shares and hoped to continue as chief executive, he added.