Tesla CEO Elon Musk drops latest bombshell with $72B buyout proposal

Elon Musk considers taking Tesla private as stock jumps

By taking Tesla private, Musk believes that the company will be able to sharpen its long-term focus of revolutionizing an automobile industry dominated by fuel-combustion vehicles without having to cater to investors' fixation on how the business is faring from one quarter to the next.

In a follow-up blog post about the privatization plan, Musk said "a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best".

At $420 per share, it would cost about $71 billion to take Tesla private. A price of US$420 a share would value the company at US$72b, nearly double Ford.

Supporters of Musk and the company view him as a visionary akin to Apple co-founder Steve Jobs, while critics have likened him to a "Wizard of Oz" like figure who has yet to turn a profit.

A deal at $420 per share represents a 22.8 percent premium to Tesla's closing price on Monday, valuing the company at about $72 billion. It also closely follows an announcement that Saudi Arabia's sovereign wealth fund has taken a 3 to 5 percent stake worth $2 billion in the company.

The unusual step taken early Tuesday afternoon came shortly after Musk dropped a bombshell on his Twitter account by announcing he had lined up the financing to buy all of Tesla's stock at $420 per share. They are also shielded from the ups and downs of the stock market. In a May earnings call, Tesla shares slipped after Musk derided "boring, bonehead" questions from analysts regarding the company's finances.

A spokesman for Tesla did not immediately return a request for comment. Based on 24 analysts polled in the last 3 months, 10 are bullish on Tesla stock, 6 remain sidelined, while 8 are bearish.

His US$12b Tesla stake would presumably be rolled into the private enterprise.

For current shareholders, Musk said he would institute a provision ensuring that their stock be converted into private shares, adding he would 'ensure their prosperity in any scenario'.

The sudden announcement gained immediate criticism from former regulators who suggested it may conflict with Securities and Exchange Commission rules for potentially market-moving statements.

However, Mr Musk has said he has no plans to do so and promised that the firm will be profitable in the second half of the year, barring any unforeseen events. Prices seesawed in the range of $360 to $370, a roughly 7 to 8 percent rise for the day, while investors tried to decide whether Musk was joking. (TSLA.O) private in a radical step that would ease pressure on the money-losing automaker.

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