Apple And Tesla: A Fairy Tale?

There have been speculations of Apple Inc. AAPL acquiring Tesla Inc TSLA. If this were to happen, the combined entity could “take over the auto industry” over the next two decades “as consumers embrace electric vehicles and automation,” Loup Ventures’ Gene Munster said in a report.

Munster added that Apple didn’t even need to acquire Tesla and could simply made an equity investment of $10 billion in the automaker. He added, however, that an investment — and even less so an acquisition — “would be hard to pull off.”

Why The Pairing Will Not Work

Both Apple and Tesla were “single product visionaries” that created world-class products, Munster pointed out.

The analyst explained, “It’s hard to imagine Apple doing a deal without some deeper operational partnership or influence on the product [...] Similarly, it’s hard to imagine Tesla management welcoming outside influence on their products when they already make the best car in the world.”

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Tesla has supermajority voting provisions, which protect the company from “unsolicited acquisition attempts and hostile takeover initiatives,” Munster stated. This provision means that an acquirer would need two-thirds of the shareholders to vote in favor of a change of control.

Elon Musk seems to have a very long-term vision for Tesla, money is not his motivation and he owns 21 percent of the company. This means that for Apple to acquire Tesla, 83 percent of the non-Musk shares would need to vote in favor of the sale, the analyst noted. He added that this seemed unlikely, given the shareholder support and insider loyalty Musk enjoyed.

“It’s fun to talk about Apple buying Tesla, but we don’t think Tesla is for sale,” Munster commented.

At Last Check

• Shares of Apple were down 0.83 percent at $135.40.
• Shares of Tesla were down 1.23 percent at $252.85.