Elon Musk Considering Taking Tesla Private, Has Already Secured Funding

Elon Musk

Trading in Tesla shares was halted on Tuesday, after a tweet by chief executive Elon Musk sent shares soaring by more than 7%.

A buyout at US$420 per share probably won't let Musk reap any benefit from the US$2.6b stock option grant he received this year.

In the email, Musk reasoned being a public company means "there are large numbers of people who have the incentive to attack the company". Factoring in $US8.8 billion ($11.9 billion) in debt, Musk's ganja-friendly target price to go private would value the company at around $US80 billion ($107.8 billion).

Tesla CEO Elon Musk is laying out his rationale for possibly taking the company private, saying the move would free the electric vehicle maker to focus on long-term goals, rather than the quarterly concerns of Wall Street.

Earlier in the day, the Financial Times reported that Saudi Arabia's sovereign wealth fund, overseen by Crown Prince Mohammed bin Salman, has built an undisclosed stake of between three and five per cent stake in Tesla. About an hour and 20 minutes after the Musk tweet, trading in Tesla stock was suspended because the company was expected to release news.

In the letter, Musk lays out several reasons prior companies have left the public sphere: The quarterly earnings reports that may distract from a long-term picture, and scrutiny from short sellers.

A deal at $420 per share represents a 22.8pc premium to Tesla's closing price on Monday, valuing the company at about $72bn.

Elon Musk is the world's 31st-richest person and Tesla's largest shareholder. In follow-up tweets, Musk said shareholders could either sell at $420 or hold their shares and go private, adding that he was super appreciative of Tesla shareholders and would ensure their prosperity in any scenario.

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"We're working on a new Tesla mini-car that can squeeze in an adult", Musk tweeted on Sunday, replying to a user who asked him about a "Model X Radio Flyer" toy vehicle.

When another person tweeted that going private "saves a lot of headaches", Mr Musk replied, "Yes".

Tesla has had more than its share of ups and downs over the past few months, due to an intense focus on production rates and sales figures for Tesla's mass-market Model 3 electric auto.

But asked if he would take legal action against Musk over the allegation, Unsworth said: 'If it's what I think it is yes'. He also suggested the move could only be temporary as he stated "once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets".

Scottish money manager Baillie Gifford, which recently urged Musk to focus less on tweeting and more on running the business, is the fourth-largest shareholder, with a almost 8% stake.

"Details, structure, participants and how the valuation has been determined remain to be seen".

But the market appeared to take him seriously with Tesla shares surging on the news.

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