Tesla Inc.'s (TSLA) Chief Executive Officer Elon Musk series of tweets revealing a plan to take the company private last week surprised more than Wall Street and investors. It also blindsided some on the board of the electric vehicle maker.
That’s according to the New York Times, which, citing people familiar with the chain of events that unfolded last week, reported Musk's tweets weren’t given much thought ahead of time and were not vetted with the company’s board. Musk said he had the funding secured for a $420-a-share buyout sending the stock soaring. With little commentary about the financing after that, it prompted uproar including two class action lawsuits and a potential Securities and Exchange Commission inquiry. (See more: Tesla's Musk Faces Class Action Suits Over Tweet.)
Musk Says He Was Being Transparent With Tweets
Musk has since attempted to calm things down by issuing a blog post Monday in which he expressed confidence that conversations with a Saudi sovereign wealth fund can lead to a deal. Musk contends the fund approached him about taking Tesla private early last year, noting that two weeks ago he was approached by the fund’s managing director who expressed strong interest in financing a go-private deal. “I understood from him that no other decision makers were needed and that they were eager to proceed,” he wrote. Three people familiar with the Saudi fund disputed Musk’s claims to the New York Times, saying the fund hasn’t made any of the moves that would be necessary for such a big deal including preparing a term sheet or tapping financial advisors. What’s more, a deal would likely prompt a review but the Committee on Foreign Investments in the U.S., noted the paper. (See more: Tesla Buyout: Conflicting Reports About Saudi Fund Involvement Emerge.)
Board Was Taken Aback By Tweets
While Musk used Monday’s blog post as a way to show the tweets were part of an effort to be completely transparent with shareholders about wanting Tesla to be a private company, sources told the paper it was impulsive and was driven by feelings of anger for the car maker's critics. Tesla is the most shorted stock in the U.S. Musk has not hidden his contempt of short sellers in the past. Shorts lost nearly $2 billion in mark-to-market losses when the stock shot up after Musk tweeted about going private.
Still, Musk contended in his blog post that Tesla's board was notified five days before he sent out the tweets about the potential deal. He said the board’s outside directors discussed going private without Musk or his brother Kimbal Musk, a board member, present. The full board agreed to have Musk discuss the idea with some of Tesla’s biggest investors. Musk says he has stayed in contact with the Saudi fund and has been reaching out to other investors ever since.