Tesla Buyout Possible

[vfx]

Is a Tesla buyout possible? Every investing site has a comment where they believe that someone will buy Tesla out, but is that even possible?

What does Elon own, something like 28% of the company?

I remember Martin Eberhard writing about how Elon took over his company so I would imagine Elon would take steps so such a hostile takeover could not happen to him.

Favorite contenders are Mercedes, Apple and Toyota taking over Tesla.

two threads

Rumor: Apple buying Tesla [Archive] - Tesla Motors Club - Enthusiasts & Owners Forum

Toyota to take over Tesla in 2011?

 

[Lyon]

I remember reading somewhere that one of the conditions of the Advanced Vehicles Technology loan that Tesla got was that Elon retain a controlling stake in the company. If I'm right, I wouldn't be shocked to find that such a takeover might not be approved. Then again, I could be wrong (both about the terms of the loan and the potential impact those terms might have).

Interesting thought though. I would think it much more likely that Toyota would be interested in such a thing than Apple.

 

[Doug_G]

I dunno, I don't think Toyota has the electric vision. Rav4 EV is a compliance car - teaming with Tesla was the cheapest way to get there. No in-house investment in the technology.

I think they'll remain independent.

 

[Zextraterrestrial]

No, it isn't gonna happen. They have just begun.

 

[Grendal]

The only way at this point would somehow be a hostile takeover. Elon had his three "big things" in college. This is one of them. Why would he let it go? It seems to be a mission with him to do it right and he is a bit of a control freak.

The exception would be that the company is going to fail and Elon let's it go instead of dying, he has some issue where he isn't interested in running it anymore, or he is forced to choose between Tesla and SpaceX. Elon has said that SpaceX is more important to him personally.

 

[agelston]

The only way at this point would somehow be a hostile takeover. Elon had his three "big things" in college. This is one of them. Why would he let it go? It seems to be a mission with him to do it right and he is a bit of a control freak.

he let both his internet companies go. Both bought out.

 

[PopSmith]

he let both his internet companies go. Both bought out.

I thought I had read he sold them (on purpose). He sold Zip2 to Compaq and then later convinced Meg Whitman that PayPal would be a perfect match for eBay.

I remember reading somewhere that one of the conditions of the Advanced Vehicles Technology loan that Tesla got was that Elon retain a controlling stake in the company. If I'm right, I wouldn't be shocked to find that such a takeover might not be approved.

Since Tesla has already fully drawn down the AVTM, couldn't the "buyer" just sign an agreement with the DOE to pay off the loan?

 

[lgagliardi]

Its definitely true that several companies would want to purchase Tesla, whether Elon sells is another story. Buyer would just pay off the DOE loan.

 

[Yelmurc]

If Tesla sold this early it would be a tragedy. No doubt whom ever bought the company would not have the same vision and drive that Elon has.

 

[Grendal]

he let both his internet companies go. Both bought out.

In interviews, it was pretty clear that he had intended to sell them. Those were stepping stones to lead to his larger ideas/ideals. I stand by my original assessment. He will not sell and is not looking to sell. He still hasn't even completed his personal goal with Tesla to create a mass market car. He has achieved the goal of inspiring the major companies to expand into EV's though.

 

[brianman]

After 100,000 units, he might let Tesla go. Unlikely prior to that.

 

[shokunin]

I sure hope not, they are just gaining momentum. I'd fear someone taking over Tesla just to squash them out (big oil).

 

[mitch672]

Remember he was granted a bunch of options that excersize based on the stock price, plus this is one of his "missions", it's too early to give up on it, but I would not be surprised if he brought in a co-CEO (or a business manager, so he doesn't have to deal with day to day issues) at some point, once things are rolling along, so he can commit more time to Space-X.

 

[vfx]

I believe Elon whine he says he could have taken the profit from Zip2 and bought an island to retire and taken the profit from PayPal and bought a chain of islands but that held no interest to him.

So maybe he sells someday in the far far future but what about if a big car company or (shudder!) oil company wants to buy him out in 2013? Is that something that could be done against the wishes of E and the gang?

 

[jerry33]

So maybe he sells someday in the far far future but what about if a big car company or (shudder!) oil company wants to buy him out in 2013? Is that something that could be done against the wishes of E and the gang?

1. I think he'll sell when he gets bored of Tesla. That's not likely to be in the next several years.

2. By the time the oil companies wake up and have to do more than just take pot shots, Tesla will be too expensive to purchase. (Assuming that any purchase is done with the goal of shutting it down.)

 

[lgagliardi]

There is no way he would sell to an oil company. If he sells, I believe it would be after Gen 3 and a production rate of 500,000 cars a year. Then he would only sell to some green capitalist.

 

[DaveT]

I don't think Elon Musk will sell Tesla, ever.

1. Tesla has already IPO'd so if he wanted more money personally he could always sell some stock (of course after the federal loan is satisfied). But if he's needing money, he would likely sell SolarCity stock first (now that's it's going public anyway). But then again, I don't think he's going to sell SolarCity stock anytime in the near future. Elon is doing what he's passionate about - trying to get to Mars and trying to get our planet into sustainable energy consumption and production. Selling Tesla doesn't help with these goals.

2. Tesla is probably best left to its own so it can innovate super fast. Being bought out by another company will likely slow down their pace of innovation, and doesn't make sense. As long as Tesla gets to and remains profitable, I don't see an upside to selling the company. It makes more sense for Tesla to aim at being the next great car company, rather than trying to sell the company.

3. I can see Elon Musk, maybe handing over the reigns of the CEO-ship to another person and remaining Chairman of the board of Tesla. But I think this will happen after at least several years. Elon has a lot of different milestones to reach (including getting to a $40b market cap) and that will take a while. Elon's a smart guy with a big sense of responsibility so I think he wants to make sure Tesla does very, very well and will remain in charge for the foreseeable future.

In short, the more you get to know Elon Musk the less it makes sense that Tesla is ever going to be sold.

 

[vfx]

Can Tesla be taken over in a hostile way against Elon's wishes?

 

[NigelM]

Can Tesla be taken over in a hostile way against Elon's wishes?

Theoretically yes. Realistically no.

BTW, MB has a right of first refusal IIRC.

 

[Grendal]

Theoretically yes. Realistically no.

BTW, MB has a right of first refusal IIRC.

Here is a summary of buyout protections (page 2) from the Stanford summary of the SEC filing:

Cgrp15 Tesla Motors: The Evolution of Governance from Inception t...

Daimler has first refusal according to the document. I wonder if that has changed since they reduced their holdings by a lot. Someone also mentioned somewhere that there is a time limit attached to that first refusal. The document also says that Musk must keep his shares for one year after the Model S reaches production.