Tesla on the verge of becoming a private firm
Elon Musk proposes to make Tesla a private company
By Divyank K. Bansal
Elon Musk recently took to Twitter to announce his intentions of making Tesla a private company. Musk cited the constant pressure of meeting the expectations and demands of shareholders on a quarterly basis as the key reason behind his proposal. According to him, this was hurting the company's long-term growth plans and it was creating a big distraction for him and all the workers alike.
However, the elaborate buy-back of all the public shares at a proposed rate of $420 per share would require Tesla to cough up nearly $70 billion. The fact that the company has only turned a small profit during just two quarters from the time it went public in 2010 has the investors worried. To purge their tension, there's speculation that Tesla has secured a huge amount of funding from Saudi Arabia's newly forged stake in it, which is also hinted by the fact that Musk, in his tweet on August 7, mentioned that the funding had been secured for the proposed move.
Musk also said that shareholders would have the option of selling their stakes or retaining their shares for partial ownership of a privately held Tesla, which sparked a debate about just how "private" Tesla would be if it kept some of its existing investors. Tesla's board said in a statement on Wednesday that Musk talked to board members last week about why going private would make sense and how a deal could be funded. The board said it is now taking the "appropriate next steps" to evaluate the proposal.
