Market Overview

Musk Name-Drops Advisors, Tesla Forms Committee To Evaluate Potential Go-Private Deal

Share:
Musk Name-Drops Advisors, Tesla Forms Committee To Evaluate Potential Go-Private Deal

Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk revealed Monday he is working with two major banks to take Tesla private, and Tesla announced it has created a formal committee to look into whether going private at $420 per share is in the best interest of Tesla stockholders. 

What Happened?

Elon Musk tweeted that he is working with investment bank Goldman Sachs Group Inc (NYSE: GS) and private equity company Silver Lake on constructing a deal to take Tesla private. Musk also said he has also hired Wachtell, Lipton, Rosen & Katz and Munger, Tolles & Olson as legal advisors.

In a separate announcement, Tesla said its board has formed a committee of three independent directors to evaluate Musk’s proposal on behalf of Tesla investors. In a press release, Tesla said it “has not yet received a formal proposal from Mr. Musk regarding any going private transaction nor has it reached any conclusion as to the advisability or feasibility of such a transaction.”

Why It’s Important

After Musk blindsided Wall Street by tweeting he had “funding secured” for a deal to take Tesla private, he was criticized for the lack of details he provided. Musk has been sued by traders who allege he didn’t have a deal in place and was instead using Twitter to manipulate Tesla’s share price.

This week, Musk revealed that much of the potential funding for the deal would come from the Saudi Arabia sovereign wealth fund. The latest news that Musk is working with teams of investors, banks and law firms are further indication that Musk’s proposal is serious.

What’s Next?

The revelation that Musk has yet to submit a formal proposal to the Tesla board may be a bit troubling for some investors. Tesla stock was down 0.66 percent at the time of publication Tuesday and is now significantly off its highs of around $380 following Musk’s original go-private tweet. Investors will be watching for news from Tesla about the details of Musk’s plan and the response from Tesla’s committee.

"Institutional investors need to weigh the illiquidity and funding disadvantages of private stakes with the benefits of management focus," Barclays analyst Brian Johnson said in a Monday note. "Institutional investors may also need to consider the lack of transparency and eventual liquidity inherent in a private stake."

Related Links:

Could SpaceX Help Finance A Tesla Go-Private Deal? Morgan Stanley Weighs In

Musk Tries To Clarify 'Funding Secured' In New Tesla Blog Post

Photo courtesy of Tesla. 

Latest Ratings for TSLA

DateFirmActionFromTo
Jul 2019ReiteratesUnderweight
Jul 2019MaintainsBuy
Jul 2019MaintainsNeutral

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

Posted-In: Barclays Brian Johnson Elon MuskAnalyst Color News Top Stories Analyst Ratings Best of Benzinga

 

Related Articles (GS + TSLA)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
MUCascendReiterates65.0
ALDRCanaccord GenuityDowngrades20.0
LEGHLake StreetInitiates Coverage On21.0
CHUGoldman SachsUpgrades13.2
STZBMO CapitalMaintains230.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Trying To Catch The Crest Of The Cannabis Wave This Summer

Heavy Metal: Goldman Downgrades Kaiser Aluminum, Upgrades Commercial Metals