(MENAFN – ProactiveInvestors – N.America) US electric auto maker Tesla Motors Inc (NASDAQ:TSLA) is buying solar panel developer SolarCity Corp (NASDAQ:SCTY) for 2bn in a renewable energy mega-deal.
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In order to establish what the two call “the world’s only vertically integrated sustainable energy company”, Tesla and SolarCity have come to terms on a multibillion-dollar merger deal.
In addition to the luxury electric vehicles it has become known for, Tesla also manufactures a home energy storage system created to complement renewable power generators such as solar cells. Tesla’s Powerwall and Powerpack will provide energy both to a home or business in addition to being used to recharge an electric vehicle. In July, Tesla made an offer of 0.122 to 0.131 shares for every SolarCity share.
Tesla Motors said it will buy solar panel installer SolarCity for $2.6 billion in shares to form a one-stop clean energy shop.
The transaction, which s subject to regulatory approval and meet other closing conditions, is expected to be closed during the fourth quarter of this year.
But Musk said the companies have a lot of synergies that they can’t take advantage of unless they’re combined.
Y. Edwin Mok, Needham & Company analyst weighed in on the finalized merger agreement between Tesla Motors Inc.
SolarCity had formed a special committee to review Tesla’s initial offer, which was pitched at 0.122 to 0.131 Tesla shares for each SolarCity share. According to Tesla, the deal could represent $150 million in cost savings during the first full year after the deal closes, which is nothing to scoff at. Tesla says that it expects this approach will result in a less expensive system, due to lower costs for installation, as well as for the hardware itself. Before the deal can close, it must be approved by a majority of shareholders from both Tesla and SolarCity.
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SolarCity gets 45 days to seek a higher bidder in a process known as a “go-shop” period. If the deal sees light of the day, it would mark the completion of Elon Musk’s first master plan to create solar roofs with flawlessly integrated battery storage system.
