The special board committee, including directors Brad Buss, Robyn Denholm and Linda Johnson Rice, hadn't reached any conclusions about "the advisability or feasibility" of a transaction and that it could consider alternatives, Tesla said Tuesday. Shareholders would also have to vote on a transaction, lawyers and advisors said.
That's another complicating factor, lawyers said. There's no guarantee that enough shareholders will agree or that enough will want to sell their shares at Musk's suggested $420 price to get Tesla's shareholder count low enough to deregister the shares. Whiston estimates about 40 percent of the shareholders might take the money, and that would cost about $28.7 billion.
Depending on state law, he'd have to get a super majority of shareholders (in Delaware, it's 90 percent) to be able to squeeze out any holdouts, lawyers said. But Musk has said there will be no forced sales.
Its biggest investors, aside from Musk himself, are mutual funds and money managers in addition to China's Tencent and Saudi Arabia's sovereign wealth fund. Collectively this group holds about 66 percent of the shares. About 17 percent are owned by investors who are too small (either in the amount of Tesla they own or the size of their portfolios) to have to report their stakes. Musk has said he believes two-thirds of Tesla's shareholders will stick with it as a private company.
The deal could turn out to be as unique as the collection of space transportation, electric automobile, high-speed transportation and solar power generation projects Musk has cobbled together in his business empire.
"There is a recipe for going private, but like everything else, Elon Musk does it his own way," said Barry Genkin, a partner at law firm Blank Rome. "He hasn't put any meat on the bones and everyone is scratching their heads about what he means."