Tesla’s board of directors is reportedly getting serious about putting in motion Elon Musk’s plan to take the company private while the market doesn’t take it as seriously as Tesla’s (TSLA) stock erases most gain from Musk’s $420 announced exit price.
Earlier this week, Musk made the announcement that he is planning to take Tesla private and that he has secured funding to do so at $420 per share.
The stock was trading about $70 below that exit option and therefore, it rose toward the price target, but it has now fallen from pressure as some analysts doubt the plan could work and Tesla shorts question Musk’s funding.
On Wednesday, Tesla’s board confirmed that Musk brought up the plan to them last week and they are ‘evaluating’ the possibility.
According to a new report from Reuters, the board is going to decide on a formal review of Musk’s proposal in the next few days and the CEO might have to recuse himself from the board:
“The board expects to make a decision on whether to launch a formal review of Musk’s proposal in the coming days, and is speaking to investment bankers about hiring financial advisers to assist it in its review in such scenario, the sources said.
If the board launches a formal review of Musk’s bid, he would have to recuse himself, or a special board committee would have to be formed, according to the sources, who requested anonymity because the deliberations are confidential.”
It’s something that Musk has done before with his proposed acquisition of SolarCity, which he received overwhelming shareholder support for.
Based on our own poll, it seems that Musk is also getting support for this new proposal:
The plan has also received support from major shareholders, including Ron Baron, who owns half of billion worth of Tesla’s stock.
But not all the details of the proposal are known and Musk will have to release a more detailed plan before bringing this to a vote.