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Tesla board waits for Musk’s plan to go private as Saudi Arabia stays silent

Ronan Glon
Tesla Motors

Tesla co-founder and CEO Elon Musk turned Wall Street on its head when he unexpectedly announced he had the funding required to take the firm private. He was completely serious, and not every member of the company’s board of directors is pleased with the idea. The board has formed a three-person committee and appointed a legal counsel to closely examine any proposal to take Tesla private — if it ever receives one.

The three-person committee is made up of current board members Brad Russ, Robyn Denholm, and Linda Johnson Rice. The statement issued by the board stresses the committee hasn’t received a formal proposal from Musk and adds its members haven’t decided what’s best for the company yet. Choosing its words carefully, the committee wrote it’s not in a position to guarantee it will accept Musk’s plan to take Tesla private. The decision will ultimately depend on the terms of the deal, where the funding comes from, and what it means for the company’s future and products.

It’s unclear when or if Musk will submit a proposal. In his initial tweet, he outlined plans to take the company private at a record-breaking $420 a share, a level Tesla has never come remotely close to. Its common stock peaked at $383.45 on June 23, 2017, and closed at $347.64 on August 14, 2018.

Taking Tesla private would require an immense investment; some analysts peg the deal at nearly $80 billion, though Musk argues the actual figure is much lower because existing shareholders would buy into the new privately held company. He explained in a blog post that the sovereign wealth fund of Saudi Arabia, a nation which ironically built its sizable affluence on oil, has approached him about going private several times over the past two years. It purchased a 5 percent stake in the California-based automaker in August 2018 and, still according to Musk, remains ready to move forward with a full takeover on a moment’s notice.

In an interesting plot twist, members of Saudi’s ruling royal family and spokesmen for the country’s sovereign wealth fund have declined to comment on the widely-circulated reports of a Tesla buyout. Bankers speaking on the condition of anonymity told Reuters they haven’t seen signs of an imminent deal, and sources close to the Saudi government told the same publication the fund won’t invest more money into Tesla.

Time will tell whether Saudi Arabia makes a move and whether Tesla’s board approves the takeover.