Elon Musk Wants to Take Tesla Private. Can He Make the Math Work?

What’s that about SpaceX?

The Times reported that people involved in the process are evaluating how SpaceX, Mr. Musk’s privately held rocket company, could help bankroll a deal for Tesla. SpaceX was valued recently at $21 billion, and Mr. Musk owns about half the company.

SpaceX is believed to be profitable and have cash on hand. But a person familiar with the company’s finances, who was not authorized to speak publicly on behalf of the company, said it does not have so much cash that it could contribute a meaningful stake to a buyout of Tesla.

Another, more likely maneuver would see Mr. Musk sell some of his SpaceX stake to help finance the Tesla deal, or use it as collateral for a big loan. In that case, Mr. Musk would need a buyer for his SpaceX shares. “The intention is not to merge SpaceX and Tesla,” he wrote in the letter to employees.

What happens next?

Investment banks, private equity firms, sovereign wealth funds and elite law firms are already working to structure a potential transaction. Three Tesla board members are evaluating the prospects of a deal as well.

If Mr. Musk can muster enough support for a deal, he will bring forward a proposal. If the board approves it, shareholders will be given the opportunity to roll into a newly private Tesla, or tender their shares.

But to ensure that the deal is protected against legal challenges, a majority of Tesla’s shareholders, excluding Mr. Musk, would most likely have to vote for the deal, said Charles M. Elson, a professor of finance at the University of Delaware. So instead of simply needing 31 percent of Tesla shareholders to combine with Mr. Musk’s 20 percent stake, a much larger proportion of the minority shareholders would in theory need to vote for the deal.

With the stock trading around $320 per share — higher than a month ago, but far below the $379.52 it closed at on the day of his fateful tweet, not to mention the prospective buyout price — investors appear to remain skeptical that taking Tesla private is a done deal.

Erin Griffith contributed reporting.

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