No sooner had Elon Musk tweeted his tentative proposal to take Tesla Inc. private, than a debate raged about whether that’s even possible at a company that bleeds billions of dollars in cash. But Musk’s idea isn’t a terrible one for a carmaker, it’s just Tesla is the wrong one. Germany’s BMW AG is a far better candidate for a buyout.
“BMW is awash with cash, it’s grossly undervalued, LBO funds would queue to back it as they could get their money back in a few years,” says Max Warburton at Bernstein Research. “Tesla has negative Ebitda, and couldn’t pay the funding costs for more than a month or two.”
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