The easy part for Tesla Motors (TSLA) is over with: The special committee of Elon Musk’s other darling SolarCity (SCTY) , made up of the only two directors on its board who aren’t conflicted by direct ties to the potential acquirer, has agreed to a $2.6 billion takeover deal.
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But Tesla argued the combination would meet the needs of a growing portion of consumers who are environmentally focused and will be drawn to the opportunity buy their vehicle from the same company that would install a solar-powered fueling station at their homes. Earlier this year in July, Elon Musk CEO of Tesla had revealed a Master Plan, Part Deux that aimed to provide consumers with a single source of hardware to fuel a lifestyle centered on low carbon lifestyle.
Tesla expects the transaction to close in the fourth quarter of 2016.
“If you’re buying (Tesla) on the anticipation of it becoming profitable, or big-time profitable, in the next few years, this is going to set back your plan, if they ever become profitable”, Levy said.
“As one company, Tesla (storage) and SolarCity (solar) can create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed”. Musk owns a 26 percent stake in Tesla Motors Inc., based in Palo Alto, California, and a 22.5 percent stake in SolarCity Corp., which is based in nearby San Mateo, California.
The $2.6 billion merger is an all-stock deal in which SolarCity shareholders will get 0.11 share of Tesla for each of their SolarCity share. Customers could learn about SolarCity products at Tesla’s 190 stores, for example, and save on installation costs because they’d be done more efficiently. SolarCity shares fell Monday morning, diving 7.33% to $24.74, and Tesla shares were down 1.08% at $232.25.
The deal includes a 45-day period for SolarCity, allowing it to solicit alternative proposals during the time frame.
Well, this deal of merger is likely to cut down the losses that both the companies are facing individually.
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If all the shareholders approve the deal, the workforce of Tesla company will be doubled to about 30, 000 employees.
