How Musk hit wall with his €70bn go-private car plan

How Musk hit wall with his €70bn go-private car plan

Elon Musk’s stunning tweet that he wanted to take Tesla private and had funding secured was a classic Mr Musk moonshot — given credibility only by the sense that if anyone could possibly pull such a brazen feat, he was the guy.

The initial scoffing after that August 7 post gave way to hiring of bankers to a board meeting where, just maybe, it was ready to take shape.

Then Mr Musk aborted his own mission when hastily assembled bankers and advisers had barely started work.

Mr Musk was perhaps spooked by blowback from investors he was sure would support him, including key backers from Saudi Arabia, according to sources.

Most shareholders wanted Tesla to remain public, the billionaire chief executive conceded in a night blog last Friday. Large institutional shareholders had limits on how much they could invest in a private company, and there was no proven path for most retail investors, who are among his most ardent and adoring fans.

“The sentiment, in a nutshell, was ‘please don’t do this,’” wrote Mr Musk.

The shares, which were little changed yesterday, have, however, slid 7% in the past year, an unusual outcome for a so-called growth stock.

Markets now value Tesla at over €47bn as regulators and lawyers conducted an autopsy over what happened to a deal potentially valued at $82bn (€70.5bn) and Tesla’s board is left with a brilliant but exhausted and erratic CEO.

“We expect shares to be under pressure in the near term as investors question the go-private process and the outcome of staying public,” Ben Kallo, an analyst at Robert W Baird, wrote in a report. Mr Kallo recommends buying the stock, saying it will rebound to above $400 as the company shows progress in increasing output of Model 3 vehicles.

The unfolding story suggests Mr Musk was sorely mistaken when he tweeted “funding secured” and later told the world “investor support is confirmed,” based on his belief that Saudi Arabia’s Public Investment Fund was eager to back his venture. The US Securities and Exchange Commission (SEC) is now investigating his tweets and blog posts.

Mr Musk’s vocal ambitions stirred unease among Saudi officials about the publicity surrounding their potential role.

The Saudis were unhappy about Mr Musk detailing his talks with its sovereign wealth fund in an August 13 blog post, where the CEO justified his earlier tweet, the sources said. On top of that, there were concerns about potential fallout from shareholder lawsuits and the SEC investigation.

- Bloomberg. Additional reporting Irish Examiner

More on this topic

Concern over number of agency social workers hired by TuslaConcern over number of agency social workers hired by Tusla

Tusla censored death cert so it ‘can’t be found’Tusla censored death cert so it ‘can’t be found’

Tusla relying on ‘flimsy grounds’ to justify redacting records and birth certsTusla relying on ‘flimsy grounds’ to justify redacting records and birth certs

New Tulsa CEO wants to turn agency away from being 'defensive' organisationNew Tulsa CEO wants to turn agency away from being 'defensive' organisation

More in this Section

Amazon deal with Deliveroo investigated by UK competition watchdogAmazon deal with Deliveroo investigated by UK competition watchdog

Falling fuel costs keep UK inflation at lowest since 2016Falling fuel costs keep UK inflation at lowest since 2016

Significant risks in extremely complex UK border Brexit preparations – watchdogSignificant risks in extremely complex UK border Brexit preparations – watchdog

Global fund managers ignore stock market rally to keep cashGlobal fund managers ignore stock market rally to keep cash


Lifestyle

Can you imagine Spanish churros, Moroccan tagines or even Christmas cakes without its fragrant taste?MIchelle Darmody: Warm smells of cinnamon

Rachel Howard visits the South Moravia region to sample this eastern European country’s finest tipples.They’re big on beer but could the Czech Republic be raising a glass to wine tourism too?

Lisa Salmon catches up with a cardiologist, who explains how a patient’s own stem cells can repair damage from heart disease and heart failure.How stem cells are mending broken hearts

Hannah Stephenson discovers America’s dark past and Martin Luther King’s vision for its future by following the civil rights trail.Charting America’s path to freedom on a road trip through the Deep South

More From The Irish Examiner