Elon Musk has announced what could be one of the biggest company buybacks in corporate history via Twitter after posting that he is considering taking electric car-maker Tesla private.
Mr Musk, Telsa’s CEO and largest shareholder, said in a Twitter post Wednesday morning (AEST) that he has secured private funding, without identifying the would-be buyer or buyers.
“Am considering taking Tesla private at $420. Funding secured,” he tweeted.
At $US420 ($539) per share, the deal would represent a 22.8 per cent premium on Tesla’s closing price Monday local time, making it one of the biggest buyback deals ever with a price tag of about $US72 billion ($97 billion).
Around 80 minutes after Mr Musk’s tweet, trading in Tesla stock was suspended as markets awaited more details from the company.
Efraim Levy, an analyst with investment research firm CFRA, said if true, Mr Musk’s move would be “an incredible and surprising development”.
Tesla shares were trading at around US$342 ($460) per share before Mr Musk’s tweet, before quickly rising as high as US$371 ($500).
Mr Musk owns nearly 20 per cent of the company.
The tweets came after a Financial Times report that Saudi Arabia’s sovereign wealth fund had built an undisclosed stake of between 3 and 5 per cent in Tesla.
In subsequent tweets on Wednesday morning, Mr Musk said taking the company private would not lead to a single dominant shareholder, as investors could opt to retain their holdings.
He said he planned to hold onto his shares and hoped to continue as chief executive.
Mr Musk is under intense pressure to prove he can deliver consistent production numbers for the Model 3 sedan, Tesla’s lowest-priced model and key to Tesla’s plans to become a mass-market car-maker.
Tesla turned a narrow profit in only two quarters since it became a public company in 2010, CNN reported, and Mr Musk has vowed the company would start turning a regular profit in the second half of 2018.
Mr Musk in yet another tweet took a swipe at some public investors, who have criticised Tesla’s performance and have taken short positions on its stock, meaning they benefit when the price falls.
Def no forced sales. Hope all shareholders remain. Will be way smoother & less disruptive as a private company. Ends negative propaganda from shorts.
— Elon Musk (@elonmusk) August 7, 2018
In a 2013 report, the US Securities and Exchange Commission said companies can use social media outlets to announce important information, as long as they comply with regulations and “investors have been alerted about which social media will be used to disseminate such information”.