Tesla has announced that it is acquiring SolarCity in a .6 billion deal, which will enable consumers to buy solar panels for their homes, storage batteries for the energy and electric cars from a single company. Tesla is working feverishly on its new, lower-cost Model 3 sedan, which is due out by the end of next year, and Musk recently said the company is also working on electric buses and semi-trucks.
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By doing this, the solar PV installer says that it can reduce costs to the extent of $150m in the first year of closing. Under the terms of the agreement, SolarCity shareholders will receive 0.11 Tesla common shares for each SolarCity share, or $25.47 of Tesla stock as of market close on Friday. CEO of Tesla and Chairman of SolarCity, Elon Musk who is also cousins with the SolarCity’s CEO-Lyndon Rive said that the deal would create a “stronger balance sheet”, for both the firms. In a staggering coincidence, Tesla just officially bought SolarCity for $2.6 billion, the AP reports.
“Solar and storage are at their best when they’re combined”.
Musk has said the deal allows Tesla to transition from an electric vehicle automaker into a fully integrated, renewable energy company. Tesla and SolarCity are no strangers to each other.
“The idea is that there is one sales process, one installation process, one service contact, one phone app to monitor things”, said Musk. The overall cost of ownership is also expected to go down with the reduction in hardware and installation cost.
The companies stated that SolarCity stockholders would get 0.110 Tesla common shares for every share they have, valuing SolarCity at $25.37 per share hinged on the 5 days volume weighted average price of Tesla shares as of July 29.
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Tesla said it expects the transaction to close in the fourth quarter of 2016. But Tesla stock has rebounded to its highest price since June 8. According to the analyst, the deal is likely to be approved by shareholders of both the companies and therefore, the transaction can be seen as getting done in near future.
