Tesla Motors said it will buy solar panel installer SolarCity for $2.6 billion in shares to form a one-stop clean energy shop. If all the shareholders approve the deal, the workforce of Tesla company will be doubled to about 30, 000 employees. The combination of the companies will create an integrated residential, commercial and grid-scale company, Tesla says.
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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. By bringing the two together, they aim to lower the price of installation and hardware, while simultaneously improving manufacturing efficiency of their products. As Musk sits on the board of SolarCity, of which his cousin Lyndon Rive is CEO (another cousin, Peter Rive, also sits on the board), they and many other executives won’t vote on the agreement.
Tesla will have a 93.5% stake in the merged company and SolarCity 6.5% under the terms of the deal, which should get approval in the fourth quarter.
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. Last month he unveiled a strategy to combine the clean energy vehicle maker with the solar panel installer.
NEW YORK (AP) – Tesla will spend about $2.6 billion on solar panel maker SolarCity in an all-stock deal.
The blog post released by Tesla today announcing the agreement with SolarCity echoes many of those dreams laid out in Musk’s updated master plan. However, the agreed acquisition requires approval from a majority of shareholders of both companies.
The decision to finance the deal entirely with TSLA stock could be a savvy one for Tesla, as its shares now trade for 80 times forward earnings.
The deal also includes a 45 day period “go-shop” provision, which will allow SolarCity to solicit from alternative proposals during the time period.
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Up to Friday’s close, Tesla shares had risen 7 percent since the company first announced the offer.
