At the beginning of this month, Elon Musk shocked Wall Street and investors by tweeting that he would take Tesla private at $420 a share, sparking speculation whether the funding for doing so is really "secured" as he said in his tweet, and who would step in to raise the funding.
Tesla's shares, already down almost 15 percent from a peak on August 7 when Musk tweeted that he had "funding secured" for a buyout at $420 a share, initially fell more than 5 percent in European and premarket trading in NY.
In the blog post, published without the fanfare of his earlier tweets, Musk said it had become clear to him that, while "there was more than enough funding" to take Tesla private, doing so would estrange numerous company's existing shareholders (and most ardent supporters of the company). The Securities and Exchange Commission initiated an investigation to learn whether Musk had misled investors about the financing. At the time Musk only said that the funding was secured.
U.S. securities law requires public company executives to have a "reasonable basis" on which to make representations to the investing public, and that would likely be the focus of an SEC probe, said three securities lawyers.
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Musk blinked partly because pulling off a buyout might require getting into bed with competitors, according to the Wall Street Journal, which reported that German auto giant Volkswagen was prepared to team up with Silver Lake to invest as much as $30 billion into the endeavor. In addition to its interest in Tesla, the Saudi sovereign wealth fund is considering an investment in aspiring US electric-car maker, Lucid Motors Inc., one of the people said. "Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was 'please don't do this, '" Musk wrote.
Musk had hired advisers including Goldman Sachs Group Inc. and Silver Lake as well as Morgan Stanley.
"Eventually this will blow over, but it's going to take at least six months", analyst Gene Munster of Loup Ventures said by phone Saturday. It finally became clear, by Musk's own admission, that it was not. Musk's exhaustion, which the CEO described in a New York Times interview, is the "most critical near-term concern".