SAN FRANCISCO -- Elon Musk scrapped his plan to take Tesla private, a remarkable reversal more than two weeks after blindsiding employees and investors with the idea in a bombshell tweet.
In a blog post published late Friday, Tesla’s chairman, CEO and largest shareholder said he had met with the board and “let them know that I believe the better path is for Tesla to remain public. The Board indicated that they agree.”
The about-face ends speculation about how Musk would raise money to take Tesla private, but it’s unlikely to ward off scrutiny of the maverick CEO’s actions. Musk’s Aug. 7 tweet that he wanted to take the electric-car maker private at $420 a share and had “funding secured” sent the shares soaring before it became apparent he didn’t have financing lined up.
The episode led to a subpoena from the Securities and Exchange Commission, according to a person familiar with the matter. Musk’s behavior, including a tearful interview with the New York Times that touched on his lack of sleep, has led to calls for Tesla to hire a COO to help reduce stress on the CEO. Musk, who also runs the rocket-launching company SpaceX and a tunnel-drilling outfit called the Boring Co., is busy trying to ramp up Tesla’s production of the Model 3 sedan and make the company profitable in the second half of the year.
In an Aug. 13 blog post, Musk indicated that he believed based on conversations with Saudi Arabia’s Public Investment Fund that he had financial support to go private. In his blog post Friday, Musk reiterated his “belief that there is more than enough funding to take Tesla private” but said a transaction would be distracting and take too long.
“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,” wrote Musk. “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.’”
Musk declined to comment further Friday on how he arrived at his decision. He was active on Twitter late Friday, sharing updates about SpaceX and a Hyperloop pod competition.
In a separate statement, a committee of independent directors formed to review Musk’s proposal confirmed the decision and announced its intention to dissolve.
“We fully support Elon as he continues to lead the company moving forward,” the three board members said.
Musk had hired both Goldman Sachs Group Inc. and Morgan Stanley, the top two merger advisers in the U.S, to advise him personally in his bid to take the company off the public market, according to people familiar with the arrangements. Both banks have been lead underwriters on most of the company’s stock and convertible debt offerings.
“Only Elon wanted to go private,” said Ross Gerber, CEO of fund manager Gerber Kawasaki and an ardent Tesla supporter, in a tweet. “No other shareholders wanted to. We’re all holding our shares either way.”
ARK Investment Management, which holds about 0.2 percent of Tesla’s shares according to data compiled by Bloomberg, had implored Musk in an open letter this week to keep Tesla public. Going private would deprive investors of the chance to participate in its rising value, Chief Investment Officer Cathie Wood said.