It’s possible Musk has had conversations with third parties about financing a transaction and feels comfortable he could round up cash. A full buyout would cost about $72 billion at $420 a share, though Musk, himself, owns 22 percent of the company and suggested he would allow existing shareholders to maintain ownership, which would lower the cost.
Investors in a privatization could include sovereign wealth funds, wealthy individuals and private equity funds, though the latter may be unlikely given Tesla’s business model isn’t a good fit for standard leveraged buyout investment.
SoftBank is not involved and just put $2.25 billion in GM’s self-driving car unit Cruise, according to a source familiar with SoftBank’s investment strategy.
Chinese funds have billions to spend, but CFIUS and other regulatory concerns could doom a large buyout of a U.S.-based company with strong ties to technology.
“Can he get the financing? I suspect he can,” Aquila said. “There’s an awful lot of cash trying to find a home right now.”
Still, it’s unlikely Tesla could raise the money through debt markets, according to people familiar with the matter. Tesla raised high-yield debt a year ago, and it’s already trading at 92 cents on the dollar. Banks may be unlikely to take the risk on raising $30 billion to $60 billion on a car company that doesn’t pump out cash and could be at risk if there’s an macroeconomic downturn.
Be the first to comment