The shareholders of the electric carmaker Tesla managed to convince its founder and CEO Elon Musk not to take the company private and urged the billionaire to keep the company public.
In a statement issued by Musk on Friday night, Musk said that the he had taken a decision to keep the company public and his decision was based on the feedback that he had received from the company’s shareholders. The shareholders included some institutional investors. The investors claimed to have said pointed out internal rules of the company that limit the extent to which the company can be included in a private company.
According to the statement Musk had also briefed the board of both Tesla and the solar panel company on Thursday about his decision to keep the company public. the board reportedly agreed to his decision.
“Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don’t do this’,” he said.
Earlier this month, the markets were surprised after he wrote in a tweet that he was planning to take Tesla private. That would enable the company to avoid the pressures of short term reporting every quarter. In the tweet, Musk also said that he had in fact also managed to secure funding for the deal. However, Tesla later said that the company still required to work out details of the deal with Saudi Arabia’s Public Investment Fund.
According to the tweet, Musk planned to offer $420 per share which was a 23 per cent premium against the closing price of the shares on 6 August. The deal would be worth $72bn if all the shares were bought. However, later Musk had said that only about one-third of stakeholders were expected to agree to the buyout.
If Tesla was taken private the company would not have had to make quarterly reports to shareholders and government authorities.
The tweet of Musk – which he claimed he had written while driving to the airport, also resulted in the US financial regulator, the Securities and Exchange Commission initiating an inquiry of possible market manipulation.
Musk had said in the statement that he had had been working with investment firms Goldman Sachs, Morgan Stanley and Silver Lake for evaluating all of the available options for the company and he had also talked to investors.
Given the feedback I’ve received, it’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company,” Musk wrote in the statement.
He wrote that during this process, his belief that there was enough funding available for taking the company private was reinforced.
(Adapted from The Guardian.com)