Musk took to Twitter the previous week to announce that he was considering taking the firm private and the funding to do that is also secured. He shared the details further in a blog post showing an employee email that he sent regarding the news. A new blog post from the CEO has revealed where the secret funding is coming from so far. The post also featured a section where he explained what he meant by ‘funding secured.’ This step was perhaps taken to bring some clarity to his first announcement which led to a lot of speculations and some lawsuits as well.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Musk began his post by explaining exactly ‘what has happened so far’ with his decision to take the company private. He said that his $420 per share buyout will be used ‘only for shareholders who preferred that option’ and that the rate is a ‘20% premium over the ~$350 the current share price.’ He said that outside directors of Tesla’s board had had an initial private meeting to discuss Musk’s proposal. The meeting was then followed by a full board meeting. Musk attended the second meeting to make a case for his position. Musk revealed the funding discussions he had with the Saudi Arabian sovereign wealth fund; talks have now been made public through his blog.
The Saudi fund reached out to the Tesla founder several times about taking the company private earlier in 2017. After the Saudi fund has bought almost 5% of Tesla stock through the public markets, Musk revisited the offer. He met with the fund’s representative on 31st July. Musk said that during the meeting the fund’s Managing Director “strongly expressed his support for funding a going private transaction.” Musk stated, “I understood from him that no other decision makers were needed and that they were eager to proceed.” He further clarified that he had not made the decision yet to make the announcement public lightly. Elon Musk had considered the offer carefully and concluded that it was the “right and fair thing to do.”
The blog states, “The only way I could have meaningful discussions with our largest shareholders was to be completely forthcoming with them about my desire to take the company private. However, it wouldn’t be right to share information about going private with just our largest investors without sharing the same information with all investors at the same time.” Musk also reassured the readers that no final decisions would be made without an “appropriate evaluation process” or the “required regulatory approvals.” The post was indeed successful to overcome the fears regarding Tesla’s future. The company’s shares rose 0.75% to $358.08 after the post was published.