Board to mull Elon Musk’s desire to privatise Tesla
San Francisco/Southfield — Tesla’s board is forging ahead with its review of Elon Musk’s bold and ambiguous gambit to take the electric-vehicle maker private.
Directors plan to meet financial advisers next week and are likely to tell chair Musk to recuse himself while they mull his proposal, CNBC reported on Thursday, citing unidentified people familiar with the matter. It is likely that a special committee of independent directors will review the details, and the board has told Musk — who owns 20% of the company — that he needs his own separate advisers, the news outlet said.
The reported deliberations would be consistent with what six directors said in a statement a day earlier: that they would take "appropriate next steps" to evaluate their CEO’s idea.
The report came after the close of regular trading on Thursday. Tesla shares rose 2.3% to $360.61 in trading Friday before US exchanges opened. The company did not immediately respond to a request for comment.
Musk thrust his fellow directors into an unprecedented situation by tweeting on Tuesday that he was considering taking Tesla private at $420 a share. The three-sentence statement that six board members issued the next day failed to address major questions including how the deal would be funded and in what way it could be structured.
It’s unclear whether Saudi Arabia’s sovereign wealth fund, which is said to have built less than a 5% stake in Tesla, has agreed to commit money to the transaction, CNBC said. Musk spoke to the Public Investment Fund about going private previously, according to the news outlet.
Musk has had to recuse himself from a Tesla deal before. He and Antonio Gracias, Tesla’s lead independent director, bowed out of the process of the company acquiring SolarCity in 2016. Both were on the solar panel installer’s board, and Musk, whose cousins ran the company, also was SolarCity’s largest shareholder.
Tesla has typically picked either Goldman Sachs or Morgan Stanley to be lead underwriter when it’s sought to raise capital. The car maker hired Evercore to advise on acquiring SolarCity, which hired Lazard as lead adviser plus several other large banks.
Musk laid out how he envisioned taking Tesla private both in tweets and in an e-mail to employees that drew comparisons to Space Exploration Technologies, where he is also chair and CEO.
For years, SpaceX has run an internal stock market for employees and other shareholders who have had the opportunity to buy or sell roughly every six months. Setting up a similar structure for Tesla could help Musk in following through on his stated desire for smaller investors to be able to hold onto their stock. It also would reduce the amount of money — which could run in the tens of billions — that Musk would need to raise for the buyout.