Elon Musk’s two companies, Electric carmaker Tesla and rooftop solar installer SolarCity now unites as one firm on a merger term.
Advertisement
“It’s really all part of solving the sustainable energy problem”, Mr. Musk said. “That’s why we are all doing this to accelerate the advent of a sustainable energy world”.
SolarCity had formed a special committee to review Tesla’s initial offer, which was pitched at 0.122 to 0.131 Tesla shares for each SolarCity share. With the combination of two companies, they said, there could be an easy “one-stop solar + storage experience”. About a month after Tesla announced its offer to acquire SolarCity, the two companies have now reached an agreement to be combined. Tesla has proposed an all-stock deal to SolarCity with an equity value of $2.6 billion. Mr. Mok has reaffirmed a Hold rating on SolarCity stock, while he has not provided any rating on Tesla stock.
The deal covers a “go-shop” provision that will enable SolarCity, which had a market value of $2.62 billion as of Friday close, to search offers from other buyers until September 14.
Back in June, we heard of Tesla chairman Elon Musk’s plan to purchase SolarCity.
While the deal has been approved by the independent board members of Tesla and SolarCity, it must now also win support from a majority of disinterested shareholders at both companies.
California-based Tesla is known as a pioneer in electric cars but since past year has also been selling batteries that can power homes and businesses.
SolarCity Corp SCTY.O agreed to be acquired by sister company Tesla Motors Inc TSLA. But Tesla said SolarCity was “getting ready to offer next-generation differentiated solar solutions”. It believes that this can be achieved by leveraging Tesla’s existing retail chain and worldwide presence.
Advertisement
In addition to the $150 million in expected cost synergy savings, Tesla said it expects to save customers money by lowering hardware costs, reducing installation costs, improving manufacturing efficiency and reducing its customer acquisition costs.
