Elon Musk, the chief executive of electric car manufacturer Tesla is taking the carmaker private at $420 per share. This move comes when the company is witnessing immense growth and financial constraints.
When the deal is implemented, it would take Tesla out of the glare of Wall Street but might limit its access to capital.
“There’s a lot of noise that surrounds a public company and people are constantly commenting on the share price and value,” Musk said. “Being public definitely increases the management overhead for any given enterprise.”
Taking Tesla Privatehttps://t.co/kw4eHOJfBh
— Tesla (@Tesla) August 7, 2018
Musk stated his plans of going private on Twitter and this shocked the investors and sent Tesla’s stock price soaring as much as 8.5 percent before trading was halted. It would be one of the biggest go-private contracts on record with a price of about $72 billion, followed by $420 per share, excelling the Texas electric utility TXU in 2007.
According to the reports, Musk’s offer would value Tesla at about $82 billion including debt. Taking Tesla private “makes a ton of sense,” said Gene Munster, a managing partner at venture capital firm Loup Ventures.
“Elon Musk does not want to run public companies,” Gene Munster added. “His missions are big and make it difficult to accommodate investors quarterly expectations. Our guess is there is a 1 in 3 chance he can actually pull this off.”
Taking the company private is one of the ways to avoid the extreme inspection of public markets. Musk has had prolonged disputes with regulators, critics and reporters, and questions remain about Tesla’s production and manufacturing difficulties, long-term demand for its cars and uncertainty over funding.
My hope is *all* current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment.
— Elon Musk (@elonmusk) August 7, 2018
Musk has also stated that he highly hopes that the present investors remain with the company even if it goes private.