The deal will be all stock, in which SolarCity shares are valued at $ 25.37 and shareholders receive 0.11 shares of Tesla for each of their SolarCity shares.
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Tesla and Solar City announced their decision to merge in an all-cash deal worth approximately $2.6bn.
In a blog post released by SolarCity, the company said that it was the pristine time to bring the two entities together. “That’s why we’re all doing this, is to try to accelerate the advent of a sustainable energy world, and I think this is an important step in that direction”.
The company added that the deal would deliver cost savings of $150m during the first full year after the acquisition is completed and predicted it would also reduce hardware, installation and purchase costs for customers. SolarCity installs residential solar panels on homes in the U.S. Rather than buying the panels outright, most customers take out long-term leases to pay for them.
Musk said $150 million is “conservative” and based on his “gut feel”.
Tesla in a filing Monday said a special committee of “independent and disinterested” SolarCity board members evaluated the proposal. (With SolarCity’s stock valued at $25.37 per share.) The deal is not complete though, as the agreement includes a 45-day “go-shop” clause, allowing SolarCity to solicit alternative offers up until September 14th this year. It seems Elon Musk agreed, saying that the Tesla Bus he talks about in his “master plan” for the company will be inspired by a VW Microbus.
Lyndon and Peter Rive, who serve as the chief executive and chief technology officer of SolarCity, were granted combined stock options of about $128 million in the San Mateo, California-based solar company in September, placing them among the 15 highest-paid US executives in 2015, according to the Bloomberg Pay Index. His cousins Lyndon Rive and Peter Rive are co-founders of SolarCity. Many analysts have questioned the deal as Tesla embarks on a challenging plan to ramp up its auto production.
Thanks to this deal, SolarCity will be able to expand its business, as its products should become available in Tesla Motors’ network across the USA. Tesla’s shares fell 2 percent to $231.01.
Musk said if someone makes a better offer for SolarCity, he has committed to vote his shares with that offer.
Going by the details shared by the Senate staff member, Tesla asserted that the fatal crash was a result of a problem in the car’s automatic braking system which the company considers as “separate and distinct” from Autopilot technology.
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Musk, who is the biggest shareholder in Tesla and SolarCity, is also chairman of the latter company.
