Today in a blog post, Tesla announced the two companies have come to an agreement: a hefty “all-stock transaction with an equity value of $2.6 billion”. He added that despite media reports of a conflict of interest due to Musk’s ties to SolarCity, it would be “a conflict of interest if we don’t merge” and try to build an integrated solar energy and storage project as two separate companies.
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Tesla’s offer represents about half of SolarCity’s value a year ago, a tumble the reflected its slowing growth, complex financial structure and the increased scrutiny of government incentives needed to make rooftop solar pay off for homeowners. This long-term roadmap offers a broad, ambitious outline of the company’s future, covering plans to create “stunning solar roofs with seamlessly integrated battery storage” as well as expand Tesla’s lineup of electric vehicles to include public transit systems and heavy-duty trucks. Musk initially offered SolarCity investors $26.50 to $28.50 a share in Tesla stock. Monday morning the offer was finalized at $25.37 (0.110 share of Tesla stock).
Musk stressed the importance of curbing use of dirty energy as quickly as possible. Pfund, a managing partner at venture capital firm DBL Investors, was early backer of both Tesla and SolarCity and served as an observer on Tesla’s board before its initial public offering. His cousins Lyndon Rive and Peter Rive are co-founders of SolarCity.
Musk says he wants the companies to combine in order to create $150 million in cost efficiencies.
The deal includes a “go-shop” provision that will allow SolarCity, which had market value of United States dollars 2.62 billion as of Friday close, to solicit offers from other buyers through September 14.
Tesla said it expects that the merger will save customers money by lowering hardware costs, reducing installation costs, improve manufacturing efficiency and reducing customer acquisition costs.
Daniel Sparks owns shares of SolarCity and Tesla Motors. The deal first needs to receive regulatory approval, and shareholders of both companies need to clear it.
SolarCity has been acquired by Tesla! Tesla (TSLA) chose to pay $25.37 a share in stock for the largest USA rooftop solar firm, according to a statement Monday.
“I think we’ll significantly exceed that in the first year”, he said.
SolarCity noted that it was forced to lower full year 2016 guidance to between 900MW to 1,000MW.
The agreement allows SolarCity to solicit alternative proposals for 45 days.
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