SolarCity Corp., the solar-energy company that’s become a major Sacramento area employer, agreed to a .6 billion merger Monday with electric-vehicle maker Tesla Motors Inc.
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While Mr Musk is chief executive of Tesla, chairman of SolarCity and the biggest shareholder in both companies, a merger agreement was not certain because SolarCity had formed a special committee to review Tesla’s offer independent of the influence of Mr Musk and other executives close to him.
The combined entity would sell solar panels, residential and commercial battery storage systems and electric vehicles under a single brand.
SCTY shareholders will receive 0.11 shares of TSLA for each share of SolarCity they own, putting the buyout price at $25.37 per share, below the range of $26.50 to $28.50 per share Tesla originally offered.
In its blog post, the company notes that it expects “to achieve cost synergies of $150 million in the first full year after closing”.
The deal includes a “go-shop” provision that allows SolarCity to solicit offers from other potential buyers for 45 days through September 14.
While electric auto maker Tesla Motors Inc. has said that the transaction would create a one-stop shop for cleaner energy, some have questioned the motives behind the deal.
Global shares were mostly higher on Monday, as investors shrugged off disappointing growth data from the US and lackluster but better-than-expected manufacturing figures for China.
The deal may draw more attention to the financial position of both companies. With one service call, customers could get their solar panels installed and connected to Tesla’s Powerwall storage unit, which preserves energy for later use. Tesla shares were up 0.51 percent at $235.99. Examples are Musk’s cousins, Lyndon and Peter Rive, who are both members of the SolarCity board.
Stocks were mostly higher on Friday, helped by better-than-expected quarterly results from Google’s parent Alphabet and retailer Amazon and a modest recovery in oil prices.
Evercore will earn an estimated $15-20 million in buy-side advisory fees, according to the consultant Freeman & Co., while Lazard will earn between $20-25 million.
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When the companies first announced their intentions to merge in June, Musk said the combination would make selling clean energy “completely seamless, painless”.
