The most likely reason for the merger between Tesla and SolarCity has less to do with Tesla’s cars and more to do with their battery-based energy storage technology.
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The difference may be due to gains in SolarCity shares since the deal was announced. However, Tesla previously suggested that it offered 0.122 to 0.131 of its shares for one SolarCity share.
The companies said SolarCity stockholders would receive 0.110 Tesla common shares for every share held, valuing SolarCity at Dollars 25.37 per share based on the 5-day volume weighted average price of Tesla shares as of Friday.
Why is Tesla buying SolarCity? The firm also expects to save customers money by being able to lower hardware and installation costs and by improving its manufacturing efficiency.
“We can’t do this well if Tesla and SolarCity are different companies”, he wrote.
This deal isn’t necessarily a lock, as Tesla’s independent shareholders still need to vote on it. (Elon Musk is actually on the board of Solar City, so he has recused himself from voting). His cousins Lyndon and Peter Rive are the founders of SolarCity, and both sit on the SolarCity board.
The boards of directors for Tesla and SolarCity, two companies that have billionaire Elon Musk as a top executive, have given the green light for a $2.6 billion merger. Under the terms of the agreement, SolarCity shareholders will receive 0.11 Tesla common shares for each SolarCity share, or $25.47 of Tesla stock as of market close on Friday.
Tesla expects the deal to close during the fourth quarter of 2016.
Tesla said the combination would create “the world’s only vertically integrated sustainable energy company”, bringing together Tesla’s electric vehicle line and its home battery offerings with SolarCity’s power-generating business. Tesla’s shares fell 1.3 percent to $231.71. Speaking before the deal was finalised, Musk said: “My personal opinion is that obviously this is something that should happen – like it’s a no-brainer”. With the combination of two companies, they said, there could be an easy “one-stop solar + storage experience”.
Evercore advised Tesla, and Wachtell, Lipton, Rosen & Katz was its legal adviser.
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At the time, Musk outlined an agreement to trade 0.122-0.131 shares of Tesla stock for every share of SolarCity stock, valuing the deal from $2.5-$3 billion, depending on the final price of the shares. Wachtell, Lipton, Rosen & Katz was its legal adviser.
