Musk hopes that Tesla will be a vertically integrated energy company, but that’s probably not what most Tesla shareholders wanted to see when they bought shares of the electric auto manufacturer.
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Furthermore, Tesla argues that its retail network of 190 stores will make this new company’s solar power and energy-storage systems more accessible to the public. But Tesla said SolarCity was “getting ready to offer next-generation differentiated solar solutions”.
The joint company is expected to save $150 million in the first year by lowering costs and improving efficiency.
The final offer stood at $25.37 a share, $200 million less than the initial proposal of about $2.8 billion that Tesla CEO Elon Musk had outlined in June.
Musk, who is chief executive of Tesla and chairman of SolarCity, will remain the largest individual shareholder, boosting his stake from 23.2% to 25.0%. Tesla says it’s confident the deal will close in the fourth quarter of 2016.
SolarCity has a 45-day period to solicit other bidders to see if anyone can top Tesla’s offer.
SolarCity is the largest solar installer in the United States, with about one-third of all solar installations across 19 states.
Tesla said SolarCity investors would get 0.110 Tesla common shares for every share they hold, valuing SolarCity at US25.37 per share.
The two companies on Monday announced an agreement to merge, with Tesla holding 93.5 percent of the combined companies and SolarCity 6.5 percent. Musk also has a commercial space flight service company called SpaceX.
On Monday, SolarCity said that it experienced lower-than-expected residential bookings in the first half of the year, so it’s reducing its full-year guidance for megawatts installed to a range of 900 to 1,000 megawatts.
Some analysts also questioned whether the deal would divert Tesla’s attention from an ambitious plan to significantly expand electric-car production in the next few years. SolarCity shareholders would receive 0.11 Tesla shares per SolarCity share.
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It’s far from clear whether the world will address this problem fast enough, or precisely which technologies will benefit from the change, but Tesla and SolarCity have just made a strong bid for a role in that future.
