Electric car and solar panel maker Tesla Inc will remain on the public stock exchanges after CEO Elon Musk said on Friday that investors have convinced him the company shouldn't go private.
The eccentric and sometimes erratic CEO wrote in a late-night statement that he made the decision based on feedback from shareholders, including institutional investors, who said they have internal rules limiting how much they can sink into a private company.
Musk met with the electric car and solar panel company's board on Thursday to tell them he thought the company should stay public and the board agreed, according to the statement.
In an August 7 post on Twitter, Musk wrote that he was considering taking Tesla private. He said it would avoid the short-term pressures of reporting quarterly results.
Am considering taking Tesla private at $420. Funding secured.— Elon Musk (@elonmusk) August 7, 2018
The tweet said funding had been secured for the deal, but the company later said the details still had to be worked out with Saudi Arabia's Public Investment Fund (PIF).
The tweet said Tesla would offer $420 per share, 23 percent above the August 6 closing price. If all the shares were bought, the deal would be worth $72 billion.
But Musk later said he expected only one-third of stakeholders to agree to the buyout. Shares shot up 11 percent the day of the tweet, but they have since pulled back, closing Friday at $322.82
The bizarre tweet, written while Musk was driving to the airport, brought an inquiry from the US Securities and Exchange Commission (SEC), which reportedly is looking into whether he was trying to manipulate the share price and the factual accuracy of his tweet that funding for the deal was "secured".
Saudi Arabia’s PIF, which became a Tesla shareholder earlier this year with a stake of just under 5 percent, is in talks to invest more than $1 billion in aspiring Tesla rival Lucid Motors Inc, Reuters reported last Sunday.
Short-sellers, who bet against a company's success, complained that Musk was trying to hurt them.
In the statement, Musk said he worked with investment firms Goldman Sachs, Morgan Stanley and Silver Lake to consider all the options, and he talked to investors.
"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," Musk wrote in the statement.
He wrote that his belief that there was more than enough funding to take the company private "was reinforced during this process."
In a statement on Friday, six members of Tesla's board wrote that the board has dissolved a three-member committee set up to study any possible go-private transaction.
"The board and the entire company remain focused on ensuring Tesla's operational success, and we fully support Elon as he continues to move the company forward," the statement said.
The SEC opened an inquiry shortly after Musk surprised investors with the tweet about going private. The agency reportedly has subpoenaed data from Tesla, indicating that a formal investigation has been opened.
The go-private deal would have ended Tesla's eight-year history as a publicly held company. Corporate governance experts say that the contradiction between Musk's tweet that funding had been secured and a later statement saying that the Saudis still had to do due diligence could be used to show Musk misled investors.
At least two lawsuits have been filed against Tesla on behalf of shareholders alleging Musk broke the law with his tweet.
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