Tesla CEO Elon Musk wants to take Tesla private with a valuation of $420 per share. Though its a bit unclear how and when Elon Musk and his supporters will make a formal buyout offer, the more we look at Tesla and Elon Musk’s activity, the more it looks like the plan has been in the works for a while.
It has been Two Years
The first point is of-course the Saudi investment fund. According to Tesla CEO Elon Musk, Saudi Arabian sovereign wealth fund approached Elon Musk multiple times in the last two years about taking Tesla private.
“They first met with me at the beginning of 2017 to express this interest because of the important need to diversify away from oil. They then held several additional meetings with me over the next year to reiterate this interest and to try to move forward with a going private transaction”. – Elon Musk
Dave Morton, The New Chief Accounting Officer: Been there, Done that.
Tesla announced the appointment of Dave Morton as Tesla’s Chief Accounting officer on July 30, 2018. Dave joined Tesla from Seagate Technology, where he was the CFO.
What is important to note here is, Dave Morton was there within Seagate’s finance team when the company went private in 2000 and then went public again in 2002.
Elon Musk not only wants to take Tesla private and be done with it, he wants to keep the option open to become a public company again.
He wrote, “This is not to say that it will make sense for Tesla to be private over the long-term. In the future, once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets.”
If Tesla wanted someone to be their Chief Accounting Officer when they are planning to go private and then go public few years later, then Dave Mortan fits the bill perfectly. He has been there and done that.
Elon Musk announced few days back that Goldman Sachs and Silver Lake will be his financial advisors.
Elon’s go private announcement invoked memories of Micheal Dell’s effort to take Dell Corporation private in 2013. It was similar because Dell was a huge company with billions of dollars in revenue and its founder wanted to take the company private after a long tussle with activist investors.
It was the biggest deal at that time and activists were circling around the company. Dell’s go-private and Tesla’s go-private plans have many similarities between them.
And there is one more, Silver Lake. A private equity firm with about $40 billion in combined assets under management.
Micheal Dell orchestrated the biggest leveraged buyout at that time, and he did so with private equity firm Silver Lake on his side.
Dell announced in July that it will go public again. And Silver Lake was right in the middle of it.
“Going public gives Michael Dell and Silver Lake the option to eventually sell down their stakes, even as they affirmed on Monday that they had no plans to do so. Following the deal, Michael Dell will own 47 percent to 54 percent of the combined company, while Silver Lake will own between 16 percent and 18 percent.” – Reuters
The First Last Straw
Elon Musk tweeting about the short burn of the century on May 4th, 2018
Oh and uh short burn of the century comin soon. Flamethrowers should arrive just in time.
— Elon Musk (@elonmusk) May 4, 2018
My 2¢ :
Elon Musk tweets in May that the short burn of the century is coming soon, when the real short burn of the century still belongs to Porsche – the small fish, acquiring Volkswagen – the large whale.
Then goes on to hire a finance expert was was part of a company that traveled on the public to private to public road.
Announces that he wants to take the company private a week later.
Then comes out and says that he has signed a private equity firm, that bet its future on Dell and took the company through the public to private to public road.
Can this all be just mere coincidence? May be. Can this be a well thought out of game of chess? May be.