While a post on SolarCity’s blog was upbeat, saying that the firms will create “the world’s only vertically integrated sustainable energy company”, it also used the one word that should worry both Tesla and SolarCity employees: synergies.
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Tesla agreed to pay $25.37 a share in stock for the largest US rooftop solar company, according to a statement Monday.
Tesla had said the deal was subject to approval of “a majority of disinterested stockholders” of both companies, and in a filing Monday said a special committee of “independent and disinterested” SolarCity board members evaluated the proposal. Tesla had previously said it offered 0.122 to 0.131 of its shares for each SolarCity share. “The outlook for next year is a little murky”. The company has seen its share price stumble on concerns of rising costs and slowing growth. Analysts will be looking for signs that the company is containing its costs and slowing its cash burn.
Tesla climbed 66 cents to US$235.45.
Tesla CEO Elon Musk, who is also chairman and a major shareholder in SolarCity, unveiled an updated “master plan” last month in which he sketched out a vision of an integrated carbon-free energy enterprise, offering electric vehicles, auto sharing and solar energy systems. It is the solar industry’s biggest deal to date. After dropping to below $190 per share following the offer, Tesla shares have recovered and ended trading on Friday at $234.79.
Reuters first reported last week that Tesla and SolarCity were close to a merger agreement. Kendall doesn’t have a connection to Tesla. Pfund, a managing partner at the venture capital company DBL Investors, was an early backer of both Tesla and SolarCity and served as an observer on Tesla’s board before its initial public offering.
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Tesla’s financial adviser was Evercore. Musk’s cousins, Lyndon Rive and Peter Rive, run SolarCity. Here are some key terms of today’s announcement: this is an all-stock transaction with an equity value of $2.6 billion based on the 5-day volume-weighted average price of Tesla shares as of July 29, 2016.
