Tesla Motors announced that it would acquire solar panel installer SolarCity to the tune of 2.6 billion in shares to come up with a completely clean energy shop.
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The electric vehicle manufacturer added that now is the right time for the merger citing the reason that it is getting ready to scale its Powerwall and Powerpack stationary storage while SolarCity is preparing to offer its next-generation differentiated solar solutions.
Specifically, according to their announcement, Tesla and SolarCity say the merger will create “an aesthetically handsome and simple one-stop solar + storage experience: one installation, one service contract, one phone app”.
Tesla says that customers will enjoy a streamlined experience because they’ll have to deal with just one installation and one service contract, and that they’ll be able to manage everything via a single app. 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.
Tesla said board members of both companies had voted to authorize the deal.
The offer values SolarCity at US$25.37 per share, based on the five-day volume-weighted average price of Tesla shares as of Friday.
Musk is also chairman and a major shareholder in SolarCity. Tesla could integrate solar cells onto the roofs of its vehicles and pair solar panels with its energy storage products.
“We expect the transaction to close in the fourth quarter of 2016”, added Tesla.
It will be an all stock deal where shareholders of SolarCity will receive a 0.11 share in Tesla for every share held.
But Musk said the companies have a lot of synergies that they can’t take advantage of unless they’re combined. The combined company would be 93.5%-owned by Tesla shareholders and 6.5% by investors in SolarCity.
Why is Tesla buying SolarCity?
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The deal includes a “go-shop” provision that will allow SolarCity, which had market value of $2.62 billion as of Friday close, to solicit offers from other buyers through September 14. The company also needs regulatory approval and must conform to other closing conditions before going ahead.
