Tesla Motors has made a .8 billion stock-to-stock offer for SolarCity, which is one of the largest and most successful solar energy providers in the United States.
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Musk described the deal as a “no brainer” in a phone call to reporters Tuesday; however, Tesla shares have since plummeted more than 13 percent-representing a loss in value of around $4.3 billion. If the deal went through, SolarCity would adopt Tesla’s name and sell its solar panels alongside power-storing batteries, he added.
He said it would transform Tesla into the “world’s only vertically integrated energy company offering end-to-end clean energy products”, from solar panels and home storage batteries to electric vehicles.
SolarCity has an existing partnership with Tesla, using Tesla battery packs as part of its solar projects.
Rive, who is also Musk’s cousin, however, told SolarCity employees that the shareholders will decide and that he is recusing himself from the decision-making process.
Mr Musk owns 22% of SolarCity and sits on the company’s board. Tesla also now provides home batteries to SolarCity, which are used to manifest the energy generated by its solar panels. In case the deal is approved it will be worth $2.5 billion to $3 billion. Musk sits on both, but has said he will not be voting on it himself. He is now chief executive of Tesla and chairman of SolarCity. The announcement has prompted a surge in SolarCity stock and a dive in Tesla shares. There are suggestions, however, that Tesla is bailing out SolarCity, which according to Reuters has around $6.24 billion in liabilities, including debt.
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Reflecting this negative shareholder sentiment, shares in Tesla Motors has dropped more than 12% in the last day of trading. His brother, Peter is the founder of the company and its chief technology officer.
