As a combined company, each business unit will work together to create fully-integrated solar power and battery-storage products for residential homes and commercial businesses, as well as full-scale grid projects. With one service call, customers could get their solar panels installed and connected to Tesla’s Powerwall storage unit, which preserves energy for later use.
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Musk figures there will be major synergies from the merger – the news release announcing the deal estimates “cost efficiencies” of at least $150 million in the first year after the deal closes.
But news of the merger generated some criticism from analysts who suggested that combining the two companies would only amplify their individual losses and could possibly distract from ramping up production at Tesla Motors.
Based on Tesla’s Friday close, the offer works out to $25.83 per share – a 3.4 percent premium to SolarCity’s last closing price. The combined company would be 93.5%-owned by Tesla shareholders and 6.5% by investors in SolarCity.
Tesla has announced that it will merge with SolarCity, creating a 30,000-employee entity it claims will be “the world’s only vertically integrated sustainable energy company”. It won’t just be an electric vehicle company but a clean energy company. The all-stock transaction would give SolarCity shareholders 0.110 Tesla common shares per SolarCity share.
Neither Tesla nor SolarCity are profitable, as most of the finds have been used to raise more capital, instead of product sales, reports The LA Times. SolarCity products will be sold at Tesla’s 190 retail stores.
As part of the agreement, SolarCity has a 45-day period known as a “go-shop”, which runs through September 14, 2016.
The companies anticipate the deal to become official in the fourth quarter of this year after they receive both regulatory and shareholder approval.
Well folks it’s official, SolarCity is joining Tesla after accepting a proposed buyout offer by the latter.
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IBD’S TAKE: Tesla shares have been rising, but the stock is well off highs and is losing money.
