Tesla Inc CEO Elon Musk on Friday said that the company would continue to trade publicly, weeks after suggesting that he would take the pioneering electric carmaker private.
Musk on Thursday met Tesla’s board of directors and “let them know” that he believed “the better path is for Tesla to remain public,” he wrote on the company blog, adding: “The Board indicated that they agree.”
Musk on Aug. 7 surprised markets by announcing on Twitter that he wanted to take Tesla private at US$420 per share. Shares have fallen more than 20 percent since.
After the announcement, Musk came under extensive scrutiny over his Twitter statements related to the proposal, especially a claim that Tesla had “secured” funding for the move.
Tesla shares tumbled on reports that the US Securities and Exchange Commission had subpoenaed Musk to talk about the tweet.
Normally, such a major announcement — taking a huge company private — would be explained in detail beforehand to regulators.
Musk said that based on his discussions with shareholders, as well as an assessment by financial advisers Silver Lake Management LLC, Goldman Sachs Group Inc and Morgan Stanley, “it’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company.”
Even though the majority of shareholders “said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don’t do this,’” he wrote. “I knew the process of going private would be challenging, but it’s clear that it would be even more time-consuming and distracting than initially anticipated.”
The company “must stay focused on ramping [up the] Model 3 and becoming profitable,” Musk wrote. “We will not achieve our mission of advancing sustainable energy unless we are also financially sustainable.”
The Model 3 is a US$35,000 mid-sized electric sedan that the company — which still has not made a profit — is banking will be its runaway hit.
Musk acknowledged that he was exhausted from overwork following the market-rattling Aug. 7 tweet.
“This past year has been the most difficult and painful year of my career,” Musk told the New York Times in an interview on Thursday last week.
The newspaper said that the swashbuckling CEO choked up at times as he talked about working endless hours trying to meet production deadlines, spending his 47th birthday in June at work and almost missing his brother’s wedding.
Musk described the infamous privatization tweet — which included an assurance that funding for going private was secured — as an attempt to be transparent.
The news shocked investors, market analysts and even Tesla board members.
Musk said on the company blog that his much scrutinized statements about financing were based on his conversations with Saudi Arabia’s sovereign wealth fund and other investors.
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