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Tesla’s Board Has Met Several Times to Discuss Going-Private Proposal

08 August 2018

Tesla stock closed Tuesday at $379.57.

Musk later clarified in a blog post that "a final decision has not yet been made", while touting the benefits of running a private company away from the "enormous pressure" of Wall Street's quarterly earnings cycle. "That sense of the market, investors-so critical for a company like Ford".

The company, which is losing money and burning through cash reserves, has not revealed how it plans to raise more than $70bn it needs to offer shareholders the $420 per share that Musk indicated. This proposed route would also keep all Tesla employees as shareholders/investors in the company, while Tesla would adopt an ownership and governance structure similar to the current form of SpaceX.

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Several securities attorneys told Reuters that Musk could face investor lawsuits if it was proven he did not have secure financing at the time of his tweet.

"Finally, this has nothing to do with accumulating control for myself. 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, and where there is as little change for all of our investors, including all of our employees, as possible".

JPMorgan analyst Ryan Brinkman said he gave only a 50 per cent probability that Tesla would go private.

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Musk has some sensible reasons for going private. And as the stock price has climbed this year, so too have the bets against it.

Tesla directors have said they knew about Elon Musk's surprise proposal to privatise the money-losing auto maker before he tweeted about it and have met several times in the past week to discuss the proposal. "With Tesla unable to take on more debt, we wonder who may fund the potential deal and end up as a new large shareholder", Jefferies said in a note. "Either way, the future is very bright, and we'll keep fighting to achieve our mission". The board has met several times over the last week and is taking the appropriate next steps to evaluate. "And if you stay as a shareholder you get less information than before and you depend more and more on Elon Musk". Company share prices, particularly in deals as giant as this one, are nearly always decided by corporate executives, board members or consultants who review market data and optimize for maximum value.

Days after Tesla opened up the Model 3 configurator to all potential buyers, not just reservation holders who got a place in line over a year ago, uncomfortable math lingers over the automaker's.

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Tesla’s Board Has Met Several Times to Discuss Going-Private Proposal