Goldman Sachs Still In Talks To Advise Musk: WSJ

Tesla Inc. (TSLA) Chief Executive Elon Musk was at it again, taking to Twitter to alert the world that he retained Goldman Sachs and Silver Lake as advisers for his planned go-private deal.

While this in itself shocked the investment community which is used to learning about deal developments via press releases and company filings, it may be another case of Musk jumping the gun. According to the Wall Street Journal, citing people familiar with the matter, Musk and Goldman Sachs are in talks but are still haggling over the terms of a possible arrangement. At the same time, Silver Lake is helping Musk but isn't getting paid for any financial advice.  (See also: Tesla Buyout: Conflicting Reports About Saudi Fund Involvement Emerge.)

Goldman Taking Its Time

It’s not common for an investment bank such as Goldman Sachs to take time discussing the terms of an advisory role but when it comes to Tesla it is being more cautious, reported the Wall Street Journal. For one thing, Musk’s use of Twitter to disclose a potential $420-a-share go-private deal last week is unorthodox, to say the least, and could get him and the company in trouble with the Securities and Exchange Commission. Not to mention that Goldman Sachs has emerged from the financial crisis much more aware of its reputation in the marketplace, something it wants to protect, noted the paper.

As of Tuesday, the Wall Street Journal reported executives at Goldman were still holding talks with Musk’s side about the details of the engagement letter which typically lays out all the fees the bank will get and protects it from any legal liability. The paper noted that with concerns that the buyout may not happen Goldman is being thoughtful in its approach. 

Board Forms Special Committee

At the same time that Musk was tweeting about his advisers, the Tesla board announced it created a special committee comprised of three independent directors to evaluate the deal. (See more: Musk's Tweets Blindsided Tesla Board Members: NYT.) In a statement, which came via a press release, the Tesla board said the special committee will include Brad Buss, Robyn Denholm, and Linda Johnson Rice. The committee has retained Latham & Watkins as legal counsel and plans to bring on an independent financial advisor to help with the review process once it receives a formal proposal. “The special committee has not yet received a formal proposal from Mr. Musk regarding any Going Private Transaction nor has it reached any conclusion as to the advisability or feasibility of such a transaction,” the company said in the press release.

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