Weeks after creating a furore by suggesting that he may take Tesla private, its founder Elon Musk on Friday announced that the company would continue to be publicly traded.
On August 7, Musk had announced on Twitter that he was considering taking Tesla private at $420 (approximately Rs 29,000) a share, and that funding was “secured”. He told employees that as a publicly-listed company, Tesla’s stock price was subject to “wild swings”, which are a distraction for the staff.
In a statement on Friday, Musk said he had received feedback indicating that most of Tesla’s existing shareholders believed that Tesla is better off as a public company. On Thursday, Musk met with the company’s board of directors and informed them that it was in Tesla’s best interests to remain public. “The Board indicated that they agree,” he said.
A large number of shareholders would also have internal compliance issues that limit how much they can invest in a private company, said Musk. “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’,” said the CEO.
In a statement issued on Friday, six members of the board of directors also said that efforts to take Tesla private were cancelled, reported Reuters. “Elon communicated to the Board that after having done this work and considered all factors, he believes the better path is to no longer pursue a transaction for taking Tesla private,” they wrote. The directors added that a special committee that was formed to consider the deal proposed by Musk was also dissolved.
Musk said the process of going private would have been more time-consuming and distracting than initially anticipated. “That said, my belief that there is more than enough funding to take Tesla private was reinforced during this process,” he said.
After Musk’s initial announcement, two investors sued him and Tesla for allegedly manipulating the company’s share prices through false and misleading tweets. The tweets led Tesla’s stock to shoot up 11% to almost $380, Bloomberg reported. But it lost about 7% over the next two days as investors questioned the feasibility of the idea and the United States market regulator reportedly began an investigation.