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Tesla's board forms a special committee to evaluate going private

Key Points
  • Tesla says the committee, made up of three Tesla board members, has not yet received a formal proposal from Musk.
  • The announcement of the committee is another signal that Tesla is seriously considering the option to go private.
  • The company says any action to take the electric car maker private will need the approval of the special committee.
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Tesla forms special committee to consider privatization

Tesla's board has formed a special committee to evaluate CEO Elon Musk's desire to go private.

The electric car maker said Tuesday the committee has not received a formal proposal from Musk, but the move to form the committee is another signal the idea is being seriously considered.

Any action to take the company private will need the approval of the special committee, made up of three Tesla board members, the company said.

Musk publicly floated the possibility of a buyout in a tweet Aug. 7, and the company has been offering updates and added context since then. Musk on Monday defended his original tweet, saying the Saudi Arabian sovereign wealth fund was interested in taking the company private. The Saudi fund declined to comment. Musk also tweeted later Monday that Goldman Sachs and Silver Lake were involved in the discussions.

CNBC reported last week that the Tesla board planned to meet with financial advisers this week to formalize a process to explore going private, and that it would likely ask Musk to recuse himself from the decision.

The special committee is composed of independent board members Brad Buss, Robyn Denholm and Linda Johnson Rice, Tesla said. The committee has retained legal counsel and plans to retain an independent financial adviser.

Buss is the former CFO of SolarCity, Musk's renewable energy venture. He also serves on the board of Advance Auto Parts and Marvell Technology.

Denholm is COO of telecommunications firm Telstra and previously held executive positions at system networks company Juniper.

Johnson Rice is the chairman and CEO at Johnson Publishing Co. and CEO of Ebony Media Operations. She also serves on the boards of Omnicom Group and food delivery service Grubhub.

Here's the full statement from Tesla, which was also filed with the SEC as an 8K form:

Tesla, Inc. (the "Company") announced today that its Board of Directors has formed a special committee comprised of three independent directors to act on behalf of the Company in connection with Elon Musk's previously announced consideration of a transaction to take the Company private (the "Going Private Transaction"). The special committee has not yet received a formal proposal from Mr. Musk regarding any Going Private Transaction nor has it reached any conclusion as to the advisability or feasibility of such a transaction.

The special committee is composed of Brad Buss, Robyn Denholm and Linda Johnson Rice. The special committee has retained Latham & Watkins LLP as its legal counsel and intends to retain an independent financial advisor to assist in its review of a formal proposal once received. The Company has separately retained Wilson Sonsini Goodrich & Rosati as its legal counsel in this matter.

The special committee has the full power and authority of the Board of Directors to take any and all actions on behalf of the Board of Directors as it deems necessary to evaluate and negotiate a potential Going Private Transaction and alternatives to any transaction proposed by Mr. Musk. The special committee's grant of authority provides that no Going Private Transaction will be consummated without the approval of the special committee. The special committee expects to provide a further update concerning the process associated with Mr. Musk's proposal as soon as practicable.

No assurances can be given regarding the likelihood, terms and details of any proposal or potential Going Private Transaction, that any proposal made by Mr. Musk regarding a potential Going Private Transaction will be accepted by the special committee, that definitive documentation relating to any such Going Private Transaction will be executed or that such a transaction will be completed.

This story is developing. Please check back for updates.

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Key Points
  • Elon Musk says his claim last week that the necessary funding had been secured was based on repeated and ongoing conversations with the Saudi Arabian sovereign wealth fund.
  • The take-private tweet may have violated an SEC rule about public announcements.
  • Musk says he felt it was necessary to inform all Tesla shareholders of his desire to go private.