Chief Executive Elon Musk said on Tuesday he is considering taking Tesla Inc private in what would be the largest deal of its type, moving the electric car maker out of the glare of Wall Street as it goes through a period of rapid growth under tight financial constraints.
“Am considering taking Tesla private at $420. Funding secured,” Musk said on Twitter. At $420 per share, a deal would be worth $72 billion overall. Musk did not disclose the source of the funding.
In a letter to Tesla employees published on the company’s blog, Musk explained that such a move - over which no final decision had been made - would let Tesla “operate at its best, free from as much distraction and short-term thinking as possible.”
Tesla shares closed up 11 percent at $379.57, slightly below their all-time high.
Asked on Twitter whether Musk would continue to be CEO under such a scenario, he replied there would be “no change.”
Musk has been under intense pressure this year to prove he can deliver on his promise to turn his money-losing company into a profitable higher-volume manufacturer, a goal that has propped up Tesla shares and resulted in a market value higher than that of General Motors Co.
The Silicon Valley company faces a make-or-break moment in its eight-year history as a public company as competition from European automakers is poised to intensify with new electric vehicles from Audi and Jaguar, with more rivals to follow suit next year.
Meanwhile, Tesla has announced plans to build a factory in Shanghai, China, and another in Europe, but details are scarce and funding unknown.
The company is still working its way out of what Musk called “production hell” at its home factory in Fremont, California, where a series of manufacturing challenges delayed the ramp-up of production of its new Model 3 sedan, on which the company’s profitability rests.
Going private is one way to avoid scrutiny by the public market as Musk and the company face those challenges.
Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts have suggested that less transparency would be welcomed by Musk.
“Musk does not want to run a public company,” said Gene Munster of Loup Ventures, as Tesla’s ambitious mission makes it “difficult to accommodate investors’ quarterly expectations.”
Musk owns nearly 20 percent of the company. He said in his letter to employees that he did not seek to expand his ownership.
A price of $420 per share price would represent a nearly 23 percent premium to Tesla’s closing price on Monday, which gave the company a market value of about $58 billion.
“Our guess is there is a one-in-three chance he can actually pull this off and bring Tesla private,” Munster said. “The 16 percent premium to the current share price may not be high enough to incentivize existing shareholders to support the sale.”
Musk tweeted that he hoped all current investors would remain were the company to go private. He made no mention in his tweets or his letter of where the funding for a deal would come from.