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Discussion in 'TSLA Investor Discussions' started by jkirkwood001, Aug 7, 2018.
Are we obliged to sell?
Rejecting a tender offer means you'd likely wind up with nothing:
If I reject the tender offer for acquisition of the stock that I own in a company and the company goes private, what happens to my stock?
At the rate it is going, it will be at $420 by the end of the week LOL.
If approved by the shareholder your stock is purchased at $420. Saudi’s purchased $2B recently.
Tesla gets $2 billion backing from Saudi Arabian sovereign wealth fund
If 50%+1 of the shares vote to sell, you are obligated to sell at the price voted on. Most brokerages will do this automatically on the closing date and deposit the funds into your account.
Over 61% of the shares are owned by institutional investors; my guess is that most of them would agree to a quick 16% gain on current prices. If you add that to the roughly 26% of shares that Elon Musk owns, there are a lot of interested parties in this sale. If this comes to a vote I'm guessing it passes.
Quite a interesting buy from the world's largest oil producer!
Agreed. Moving away from oil is a start. Diversification.
There's a difference between a tender offer and a takeover. As noted above the organizational docs for most public co's provide that they can sell the entire company if they get board approval plus 50%+1 shareholder approval, and those voting No can be "dragged" along.
I don't agree with the second part. The top institutional investors understand Tesla's value. They are not the type of traders who look for quick 16% gain. They are looking for 1000~2000% gain from today's level. Elon already said he will retain his shares in either case.
That would have a pretty serious impact on Tesla's debt. Shareholders can be fobbed off quarter by quarter, bond holders not so much if further capital is needed later.
Is Elon really doing this because he doesn't like reporting losses publicly?
I personally think that privately owned or close-held is much better for companies, particularly when you don't need to worry about shareholders pushing against riskier ideas or taking companies in directions they don't wish to go.
Interesting further tweets:
"Shareholders could either to sell at 420 or hold shares & go private"
"My hope is *all* current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment."
Personally, I've often said that if I had my way, public trading of company shares would be gone. Public Liability Companies would be essentially banned with only Limited Companies allowed. I don't like the share market at all and would rather it disappeared. I don't mind raising capital for growth, which would be paid back after a set time once growth is achieved; so bonds would be okay.
A few points:
1) Most of the institutional investors bought in at a lower price than today's market price
2) An instant 16% return is huge from an institutional perspective
3) Just because an investor votes to go private does not mean they would lose equity in the firm. The largest investors could retain an equity position in the private company in exchange for voting to go private.
I can guarantee you that not a single institutional investor thinks TSLA will return 1000-2000% in any reasonable time frame. Even the most bullish analysts have a price target in the $500 range. If you were managing a large fund with a position in TSLA, you'd lose your job if you said no to this offer.
Tesla trading halted...
Tesla suspends shares after Elon Musk tweets he wants to take the carmaker private
Tesla shares halted after string of Musk tweets on possibly taking company private
Geez... Anything to protect the shorts.
The "secured funding" is only at $420 a share, so they have to stop it because at this rate they don't enough money to buy all the shares!
What happens to options with an expiration after the date of sale? Is a Jan 2020 400 call only going to be worth $20?
Answered in another thread alreayd, but yes once the sale is confirmed the option will lose all time value and is just real value i.e. 20.
All open option contracts would be exercised at the time of closing based on the underlying value of $420. So your $400 strike calls would net you $20.
It is interesting that the price of 420 also references Marijuana. I wonder if Musk picked that number for that exact reason.