The $2.6 billion tag equates to a purchase price of $25.37, meaning every SolarCIty shareholder will receive 0.110 Tesla share for every share held. Up to Friday’s close, Tesla shares were up 7 percent since the company first announced its proposal.
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The vehicle maker said it expects to save US$150mln in the first year as well as efficiency improvements from the tie-up, while beefing up the pair’s combined balance sheet.
Tesla shares also dipped, as Musk repeated that if the deal is consummated, the combined Tesla-SolarCity could require a “small equity capital raise” next year.
SolarCity, shares were down 5.1 percent at $25.34, while Tesla dropped 1.9 percent at $230.40.
SolarCity, based in San Mateo, Calif., was started in 2006 by brothers Peter and Lyndon Rive with help from Musk, their cousin.
The offer values SolarCity at $25.37 United States per share, based on the five-day volume-weighted average price of Tesla shares as of Friday. The idea is to use Tesla’s range of energy storage products to store energy generated from SolarCity’s solar panels, thereby creating a one-stop shop for renewable energy purchasing, installation, and management.
Some analysts are skeptical that combining Tesla and SolarCity will yield a quick turnaround.
The deal combines two of entrepreneur Elon Musk’s public firms to create what he has called “the world’s only vertically integrated sustainable energy company”.
Musk said Monday that if SolarCity finds another buyer at a higher price, “I guess the independent board members would be compelled to accept that”.
California-based Tesla is known for its electric cars but since a year ago has also been selling batteries for residential and commercial use.
“You don’t want a gas station at your house”, Musk said.
The initial announcement of the SolarCity acquisition drew quick and unusually harsh criticism, at least in part because of perceived conflicts of interest. We also need to obtain regulatory approval and meet other closing conditions.
SolarCity (SCTY) will get 45 days to seek an alternative suitor in a provision known as a “go-shop” period. So far, it has been approved by the boards of directs at both Tesla and SolarCity, but the deal is not expected to be finalized until late 2016. The company’s stock fell by 6 percent in mid-day trading, reversing a steady rebound in its share price since the preliminary deal was first disclosed.
On Monday, Shares of Tesla Motors Inc (NASDAQ:TSLA) gained 0.28% to $235.44.
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Tesla’s stock is up a bit from the news, up 0.2 percent to $235.30.
