Coverage: Musk proposes taking Tesla private

Chief Executive Elon Musk said on Tuesday he is considering taking Tesla Inc. private in what would be the largest deal of its type, moving the electric car maker out of the glare of Wall Street.

Alexandria Sage and Sonam Rai of Reuters had the news:

Asked on Twitter whether Musk would continue to be CEO under such a scenario, he replied there would be “no change.”

Musk has been under intense pressure this year to prove he can deliver on his promise to turn his money-losing company into a profitable higher-volume manufacturer, a goal that has sent Tesla’s valuation higher than that of General Motors Co.

The Silicon Valley company faces a make-or-break moment in its eight-year history as a public company as competition from European automakers is poised to intensify with new electric vehicles from Audi and Jaguar, with more rivals to follow suit next year.

Meanwhile, Tesla has announced plans to build a factory in Shanghai, China, and another in Europe, but details are scarce and funding unknown.

Tae Kim of CNBC.com reported that the Saudi Arabia sovereign wealth fund has taken a big stake in Tesla:

The media outlet said the Saudi’s Public Investment Fund bought a 3 percent to 5 percent stake in the electric car maker, according to people with direct knowledge of the matter.

The stake is worth $1.9 billion to $3.2 billion at the company’s current share price.

The Saudi fund approached CEO Elon Musk about buying newly issued shares, the report said, but Tesla declined. Instead the Public Investment Fund bought the shares in secondary markets.

Reuters later confirmed the Saudi fund bought a stake “at just below 5 percent” of the company, according to a source familiar with the matter.

Steve Goldstein of MarketWatch.com explored whether Musk broke any rules with his disclosure:

First, the most obvious — is Musk serious? Because if he is, the tweet still may have violated law, to a small degree, by not informing investors over other channels.

Regulation Fair Disclosure, or FD, requires companies “to distribute material information in a manner reasonably designed to get that information out to the general public broadly and non-exclusively.”

A post by Netflix CEO Reed Hastings on his personal Facebook page about the service’s viewership triggered an investigation, but not enforcement action, by the Securities and Exchange Commission. The agency then clarified that a social-media post, on its own, is not enough, unless investors are warned ahead of time to watch that space.

There does not appear to be any communication from Tesla to keep a close tab on Musk’s Twitter feed. Here’s the exact language from the company: “Tesla investors and others should note that we announce material information to the public about our company, products and services and other issues through a variety of means, including Tesla’s website, press releases, SEC filings, blogs and social media, in order to achieve broad, non-exclusionary distribution of information to the public.”