Tesla to remain public, Elon Musk announces
After about two weeks of commotion over Musk's claim of taking Tesla private, the South African-born entrepreneur, on Friday night, announced that Tesla isn't going private after all. Saying that the process of going private would be "more time-consuming and distracting than initially anticipated," Musk said that Tesla must remain absolutely focused on its Model 3 production, and reaching profitability. Here's more.
Musk, in the note shared to all Tesla employees, cited investors' sentiments as one of the reasons behind halting Tesla's privatization move. "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'," explained Musk. He added that right now, financial sustainability was Tesla's priority.
Meanwhile, six Tesla directors - James Murdoch, Antonio Gracias, Robyn Denholm, Brad Buss, Ira Ehrenpreis and Linda Johnson Rice - who had served on a special committee tasked with reviewing Musk's privatization proposal said that Musk "believes the better path is to no longer pursue a transaction for taking Tesla private." "We fully support Elon as he continues to lead the company," they added.
On August 7, Musk had tweeted that he planned to take Tesla private and claimed that he had secured funding for the move. His tweet saw Tesla share prices rise. However, it turned out funding was far from secured. Consequently, he faced inquiries from the Securities and Exchange Commission (SEC), even as rumors surfaced that Saudi Arabia was willing to fund the privatization move.
Back then, Musk, who hasn't always had the best relationship with shareholders, had cited his frustration with some investors as the reason behind taking Tesla private. Explaining his "rationale", Musk had said that Tesla, being a public company subject to stock market fluctuations, often faced "enormous pressure" to take short-term decisions in lieu of long-term ones associated with Tesla's larger goals.