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Tesla Buyout Could Be the Largest Ever | News & Opinion

Tesla founder and CEO Elon Musk announced that he was considering taking the company private at $420 per share. That’s if a deal with a Saudi investment fund happens, which is a $72 billion uncertainty.


statista chart tesla leveraged buyout

Elon Musk might do well to heed the dictum, “Never tweet.” He has tangled with journalists and rescuers of Thai soccer teams, launched companies with little planning, and promoted short shorts. But there is one tweet that could end up truly costing him.

The Why Axis BugOn August 7, the Tesla founder and CEO announced he was considering taking the company private at $420 per share. The tweet raised the interest of the Securities and Exchange Commission and resulted in lawsuits from investors.

Musk has stood by his comment and today released a statement that defends the manner in which he revealed his intention and the deal that prompted it. He said that the Saudi Arabian sovereign wealth fund had approached him several times about investing in Tesla and that at a July 31 meeting, the managing director “strongly expressed his support for funding a going private transaction for Tesla at this time.” But an official deal is not in place, as the rest of the post makes clear. Musk says that the managing director has requested additional details and has said that support is also subject to due diligence and the fund’s internal review process.

Musk’s clarification seems to still leave Tesla open to an SEC investigation and the aforementioned lawsuits. Should Tesla succeed in overcoming the process and any challenges to it though, a deal to take Tesla private could be the largest buyout ever. The company is valued at $72 billion, which is nearly $40 billion more than the next largest buyout in history—that of TXU Energy in 2007. Musk disputes the buyout amount, saying in today’s statement that “reports that more than $70B would be needed to take Tesla private dramatically overstate the actual capital raise needed.”

Like so much else in this episode of Tesla’s story, there is a lot left to be determined. Despite the certainty in his original statement, Musk himself acknowledges this: “If and when a final proposal is presented, an appropriate evaluation process will be undertaken by a special committee of Tesla’s board.”

For now, for the sake of Tesla, Musk, and investors, the less that’s said, the better.




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