Tesla board to weigh go-private

World
Europe

Tesla's board of directors said Wednesday it will evaluate possibly taking the electric carmaker private as US securities regulators reportedly questioned chief executive Elon Musk's unorthodox announcement of the proposal.

A statement from the Tesla board said directors had met "several times" to discuss the idea after Musk raised going private as a better solution for the automaker's long-term growth.

The board "is taking the appropriate next steps to evaluate this," the statement added.

Musk jolted markets Tuesday by announcing the proposal on Twitter and saying he could finance the buyout at a large premium to current valuation, at a price of 420 US dollars a share.

The Wall Street Journal, citing unnamed sources, reported Wednesday afternoon that the US Securities and Exchange Commission inquired whether Musk's statements were factual and why the disclosure was made on Twitter rather than in a regulatory filing.

Companies can come under scrutiny for misleading statements, but the agency in 2013 said firms may use social media "to announce key information ... so long as investors have been alerted about which social media will be used to disseminate such information."

The SEC declined comment. Tesla did not immediately respond to a request for comment.

Tesla shares, which surged 11 percent Tuesday on Musk's statements, dropped 2.4 percent to close at 370.34 US dollars on Wednesday.

Many companies avoid releasing market-moving news during trading hours, but Musk floated the idea in an afternoon tweet and then elaborated in a series of responses to questions on the social network, before the company finally released a letter to employees with more details on the rationale.

Going private would liberate the company from the quarterly reporting cycle, allowing it to be "free from as much distraction and short-term thinking as possible," Musk said in a blog post.

But legal experts and equity analysts said the announcement raised more questions about Musk, who has had prickly relations with Wall Street and has been involved in a number of controversies in recent months.

Source(s): AFP