Tesla board confirms Elon Musk's buyout plans

Flags fly over the Tesla Inc. Gigafactory 2 which is also known as RiverBend a joint venture with Panasonic to produce solar panels and roof tiles in Buffalo New York

By taking Tesla private, Musk believes that the company will be able to sharpen its long-term focus of revolutionizing an automobile industry dominated by fuel-combustion vehicles without having to cater to investors' fixation on how the business is faring from one quarter to the next.

"T$3 he reason for doing this is all about creating the environment for Tesla to operate best", the email reads.

Tesla Inc said on Wednesday its board is evaluating chief executive Elon Musk's idea of taking the company private after he brought the matter up for discussion last week. Musk's money-losing and cash-burning company is an unlikely candidate for debt investors to be willing to help go private.

Former SEC chair Harvey Pitt told CNBC that while the U.S. stock market regulator permits executives of publicly listed companies to use social media to make statements about their businesses, Musk's tweet was still "highly unprecedented".

Musk shocked the market, yet again with a tweet on Tuesday that he was considering taking the loss-making company private at $420 a share.

Midway through the trading session in NY on Wednesday, Tesla shares were down 5% at $374 after surging 11% on Tuesday. "I own about 20 percent of the company now, and I don't envision that being substantially different after any deal is completed", Musk added.

FILE PHOTO: Elon Musk, founder, CEO and lead designer at SpaceX and co-founder of Tesla, speaks at the International Space Station Research and Development Conference in Washington, U.S., July 19, 2017.

Musk also said he intends to give Tesla's existing shareholders the option of retaining a stake in the company through a special fund, if they want.

Musk has promised a sustained net profit starting in the third quarter. The company already has a $2 billion investment from Saudi Arabia's sovereign fund as well as Tencent, which took a 5 percent stake in 2017.

Company share prices, particularly in deals as giant as this one, are nearly always decided by corporate executives, board members or consultants who review market data and optimize for maximum value.

Any buy-out would require a shareholder vote.

Tesla stock, which has been on the rise for days, skyrocketed after the tweet and ended Tuesday up 11%. Korus said he would need more details from Musk to judge whether a buyout offer would be practical and at what price it would be attractive. "And if you stay as a shareholder you get less information than before and you depend more and more on Elon Musk".

"They're being bombarded with questions that we don't think are as relevant to the long-term value of the company", said Sam Korus, an analyst for ARK Investment Management, which had 443,874 Tesla shares as of June 30.

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