The amount Tesla has offered is on the low range with SolarCity shareholders receiving 0.11 share of Tesla for each SolarCity share.
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In the announcement, Tesla said it hopes to scale its platform from just battery-powered cars and energy storage systems to a fully integrated sustainable energy company offering a one-stop shop for going green. Power could be gathered through SolarCity’s solar panels and then routed into a Tesla Powerwall; that electricity could then be use to run appliances inside the structure, or perhaps, y’know, charge the Model S in the garage.
“This is really all part of solving the sustainable energy problem”, said Elon Musk, the chairman and biggest shareholder of both companies, during a conference call. The details, outlined in a joint statement published on both companies’ websites on Monday, come a little over five weeks after Tesla submitted an earlier proposal to acquire SolarCity. The deal is expected to be finalized by the end of 2016.
Last month, Musk unveiled his “Master Plan” plan which laid out a vision of an integrated carbon-free energy enterprise, offering electric vehicles, auto sharing and solar energy systems.
The Tesla-SolarCity agreement involves an all-stock transaction that values SolarCity at $25.37 a share, which works out to $200 million less than the price that was set last month.
He said that it could reach customers, installing roof solar panels, sending power to Tesla storage batteries in their homes, and Tesla cars in their garages. Shares of Tesla rose 0.2% to $235.31 in premarket trade, while those of SolarCity plunged 6.2% to $25.05.
S&P Global raised its target price for SolarCity shares to $26 but reiterated its “sell” opinion on Tesla shares Monday, saying the deal benefits SolarCity more than Tesla.
The companies expect the merger will save $150 million in the first year after closing, which they say will happen later this year.
“Solar and storage are at their best when they are combined”.
Tesla shares were little changed at $234.95.
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SolarCity gets 45 days to seek a higher bidder in a process known as a “go-shop” period.
