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Business

Why Elon Musk is a 'mad scientist'

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Business

Why Elon Musk is a 'mad scientist'

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COMING UP:Why Elon Musk is a 'mad scientist'

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00:00:00
>> I'm really confident.>> So it turns out Elon Musk is a mad scientist after all. I'm Jeff Goldfarb with Reuters Breaking Views in New York. So Tesla, the electric car maker that Elon Musk built and created and runs is trying to buy this solar energy company, Solar City, where he's chairman and also owns about 20% of the company.
00:00:20
It's a crazy deal. It's easy to be inspired by what Elon Musk does as a scientist. Sending rockets to Mars, coming up with the electric car, solar energy for homes. But, the financial engineering that would be behind this merger, looks just absolutely batty. There's an idea about shared ideals, which doesn't really provide a lot of financial benefits to shareholders.
00:00:50
We've already seen the deal's valued at about $2.8 billion at the maximum, and Tesla has already lost over $2 billion in market value. So in a way, it's sort of robbing Elon to pay Elon, cuz he has stakes in both these companies. There's other confusion about this deal too, because SpaceX, which is a private company, which is building rockets to go to Mars, owned by Elon Musk, also has been buying debt in Solar City.
00:01:18
So, because there's so little logic obvious to this deal from a financial standpoint, it sort of makes you wonder whether or not there's some sort of alterior motive. There have been suggestions maybe that he has borrowed against some of his stock. The entanglements are just really confusing. Now, to their credit, they are leaving the decision about whether this merger should go forward to board members who are quote, unquote, disinteresteds.
00:01:45
So, in other words, Elon and his cousins, one of his cousins is CEO of Solar City. They will not be part of the deliberations. It'll be the independent board members, and eventually, when it goes to a vote, their votes as managers and shareholders will not count. It'll be for the disinterested shareholders.
00:02:04
So, they are leaving it to the others. For now though, it's really hard to see where there's any real logic in this deal. And that's why Elon Musk is basically sort of gone a bit mad with science.