Tesla CEO Elon Musk’s surprising proposal to take the electric car maker private has prompted regulators to suspend trading in the company’s stock.
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. That would cost about $70 billion, making it one of the biggest buyouts in U.S. history.
The disclosure initially raised questions whether the eccentric Musk was joking, but he then amplified on his plan in a subsequent tweet that said he intended to create a special fund that would allow all current Tesla shareholders to retain a stake in the car maker if they want.
At $420 per share, a deal would represent a 22.8 percent premium to Tesla’s closing price on Monday, making it one of the biggest go-private deals with a price tag of about $72 billion.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Tesla’s shares were up 6.5 percent at $363.46. The company had a market value of $58 billion as of Monday’s close. Musk owns nearly 20 percent of the company.
Separately, Financial Times reported on Tuesday Saudi Arabia’s sovereign wealth fund, overseen by Crown Prince Mohammed bin Salman, has built an undisclosed stake of between 3 and 5 percent stake in Tesla.
“I believe Tesla considers Tweets as public disclosure. I think he’s serious. Plus this is short squeeze rocket fuel after a nice quarter,” said analyst Chaim Siegel from Elazar Advisors.
While Musk is known for making erratic tweets, he tweeted “420” in a reply to Fox Business anchor Liz Claman, following up on his initial tweet. The company did not immediately respond to request for comment.
“If true, this would be an incredible and surprising development. We still would see risk to completion of such a deal,” said CFRA analyst Efraim Levy.
He is also under intense pressure to prove he can deliver consistent production numbers for the Model 3 sedan, Tesla’s lowest-priced model and the key to its plans to become a mass-market automaker, after a host of manufacturing challenges and concerns it was burning cash too quickly.
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