Tesla representatives describe the deal as transforming itself into the world’s only “integrated sustainable energy company”. Japanese steelmakers increased output for the first time since 2014.
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Electric vehicle maker Tesla on Monday announced that California-based solar power company SolarCity has agreed to Tesla’s $2.6 billion (2.3 billion euro) takeover bid.
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).
“We can’t do this well if Tesla and SolarCity are different companies”, he wrote. SolarCity actually closed at $26/share on Friday. Tesla initially offered between 0.122 and 0.131 of its shares for one of SolarCity’s back in June. Together the companies will create, “fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed”.
The deal represents a marriage between two companies overseen by Elon Musk. The all-stock transaction would give SolarCity shareholders 0.110 Tesla common shares per SolarCity share. Wall Street however has some concern with this union and in response Tesla and SolarCity Corp (NASDAQ:SCTY) shares dipped after the announcement. Tesla could integrate solar cells onto the roofs of its vehicles and pair solar panels with its energy storage products.
Under the agreement, SolarCity also has a 45-day period known as a “go-shop”, during which it is allowed to solicit alternative bids. SolarCity shares fell Monday morning, diving 7.33% to $24.74, and Tesla shares were down 1.08% at $232.25. The company imagines offering “one installation, one service contract, one phone app” to its customers.
Musk owns 23 percent of SolarCity, the United States’ biggest supplier of consumer solar energy solutions.
“Solar and storage are at their best when they’re combined”, the companies explain in the blog. Tesla previously said it would offer $23.56 to $25.30 per SolarCity share.
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Tesla and SolarCity expect to save $150 million in costs in the first full year after the deal closes as the combination would improve manufacturing efficiencies and reduce customer acquisition costs.
