The board of Tesla announced on Wednesday that it is evaluating the idea of taking the company private.
The announcement comes a day after Chief Executive Elon Musk surprised shareholders with the idea of launching the biggest leveraged buyout of all time, Reuters wrote.
Tesla’s website on Wednesday reported that six of Tesla’s nine directors said the board had met several times over the last week to discuss such an idea and was “taking the appropriate next steps to evaluate this.”
Musk on Tuesday wrote on Twitter that he was considering taking electric carmaker private at $420 a share, which would value a deal at more than $70 billion.
He said funding was “secured,” without elaborating.
According to Tesla, the discussions had addressed the issue of how to fund such a deal but gave no details.
Meanwhile, there was no information on how the $420-per-share price was established.
Several securities attorneys told Reuters that Musk could face investor lawsuits if it was proven he did not have secure financing at the time of his tweet.
Reuters reported that several Wall Street analysts are skeptical of Musk’s ability to gather the huge financial backing to complete such a deal, given that Tesla loses money, has $10.9 billion of debt and its bonds are rated junk by credit rating agencies.
“Who gives $30 to $50 billion to buy back the shares?” asked NordLB analyst Frank Schwope. “And if you stay as a shareholder you get less information than before and you depend more and more on Elon Musk.”
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