Six of Telsa’s board members on Wednesday confirmed they’ve met several times over the past week with CEO Elon Musk to discuss taking the company private.
The confirmation came a day after Musk first mentioned the idea publicly on Twitter, sending the stock market into a tizzy.
Here’s the statement from board members Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice and James Murdoch:
Last week, Elon opened a discussion with the board about taking the company private. This included discussion as to how being private could better serve Tesla’s long-term interests, and also addressed the funding for this to occur. The board has met several times over the last week and is taking the appropriate next steps to evaluate this.
Two board members didn’t sign the letter: Musk’s brother Kimbal Musk and venture capitalist Steve Jurvetson.
The Tesla CEO’s Tuesday tweet came seemingly out of nowhere.
In it, however, he made some eye-popping statements: Taking Tesla private at $420 a share would value the electric car company at around $70 billion, much higher than its current market cap. That price would also make the deal the biggest leveraged buyout ever. Meanwhile, Musk’s statement that funding was “secured” raised questions about who would provide the funding and whether such information was being properly disclosed.
Tesla shares were up by more than 10 percent on Tuesday before the Nasdaq halted trading.
Later on Tuesday, Musk shared an email sent to Tesla employees, confirming that his tweet wasn’t just a joke.
If funding is not “secured,” Musk’s assertion on Twitter could amount to securities fraud. On top of that, using Twitter to report material information about a public company falls into legally dicey territory. As Fortune points out, the US Securities and Exchange Commission a few years ago established what’s known as the “Reed Hastings rule,” following an investigation into the Netflix CEO’s public statements: The rule says that social media is an acceptable way for a company to communicate material information as long as investors have been told to watch social media channels.
Wednesday’s statement from the board said the members discussed funding with Musk, but it did not give any further details on where such funding would come from.
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