Two weeks after a bizarre tweet he made on August 7 in which Elon Musk, Tesla’s CEO had said that he was thinking of taking the company private, he made an about face. In his tweet, Musk had said that he had secured funding for the deal as part of which Tesla would offer USD 420 for each share, which was 23 per cent above the closing price of the stock on August 6. If the shares from all the shareholders were acquired, the deal would have been worth USD 72 billion.
Musk had mulled taking the private route as he was feeling pressured by the need to demonstrate short-term results. Musk had taken even senior management executives of his own company by surprise when he made the tweet as Tesla still had to work out the details for the private funding from Saudi Arabia’s Public Investment Fund.
In the wake of Musk’s tweet, the US Securities and Exchange Commission started looking into whether Musk was trying to manipulate Tesla’s stock price. Musk himself admitted later on that he had expected only one-third of the stakeholders to agree to the buyout. Tesla’s stock price plunged in the wake of Musk’s tweet.
Musk recently revealed that shareholders and investors have convinced him that Tesla should continue to remain on the public stock markets. Musk said in a statement he issued that he had worked with renowned investment firms like Morgan Stanley, Goldman Sachs, and Silver Lake to review all the options, and 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.
According to Musk, he changed his stance based on feedback he had received from individual shareholders. Institutional investors have internal regulations that limit the amount that they can invest in a private company.
Musk met Tesla’s board recently to update them on his decision to stay public and this decision was approved by the board.
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