Elon Musk abandons plan to take Tesla private after tweets trigger fraud claims

Entrepreneur says plans cancelled after meeting with shareholders.

Toyin Owoseje
Sunday 26 August 2018 00:28
Comments
Elon Musk has abandoned plans to take his company private in a $72 Billion deal.
Elon Musk has abandoned plans to take his company private in a $72 Billion deal.

Tesla boss Elon Musk has abandoned his bid to take the electric car maker private in a record $72bn (£55bn) deal after the idea angered investors and led to accusations of investment fraud.

In a statement shared on Tesla’s website, the business magnate conceded the company was ‘better off’ remaining a publicly traded company.

Mr Musk, who owns about a fifth of Tesla, mentioned resistance from shareholders, logistical hurdles as well as feedback from institutional investors as just some of the reasons that the proposal had lost its appeal.

"Given the feedback I've received, it's apparent that most of Tesla's existing shareholders believe we are better off as a public company. There is also no proven path for most retail investors to own shares if we were private," he wrote.

"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'".

The decision comes weeks after he provoked a firestorm by announcing on Twitter he had he secured funding to take Tesla private for $420 per share.

One of his tweets posted on 7 August read: “My hope is *all* current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment.”

His comments surprised the financial markets and Telsa's stock price shot up more than 13% above the previous day’s close.

However, the impulsive move also led to the billionaire and Tesla being sued by investors and prompted an investigation by the US Securities and Exchange Commission into whether Mr Musk violated securities laws by claiming he had funding.

In one of the lawsuits, the plaintiff Mr Isaacs said Mr Musk mislead the market to artificially inflate Telsa's stock price. He added that Tesla’s failure to correct them amounted to a “nuclear attack” designed to “completely decimate” short-sellers.

Tesla’s share price has since fallen by around 20% and remain volatile.

"I knew the process of going private would be challenging, but it’s clear that it would be even more time-consuming and distracting than initially anticipated. This is a problem because we absolutely must stay focused on ramping Model 3 and becoming profitable," Musk added in the statement.

"We will not achieve our mission of advancing sustainable energy unless we are also financially sustainable."

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in