The deal, according to Tesla, would accelerate the company’s transition into a fully integrated, renewable-energy products company, improving “the way that energy is generated, stored and consumed”.
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He had more to say about the merger in the Tesla “master plan” update he gave in July, where he laid out the goal of creating a “solar-roof-with-battery product” that can deployed with one order, one installation, and one service contact for the customer.
The deal will provide Tesla Motors with significant cost savings and dramatic improvements in manufacturing efficiency, reported Reuters.
As part of the deal, SolarCity shareholders will receive 0.110 Tesla common shares per SolarCity share. As Musk sits on the board of SolarCity, of which his cousin Lyndon Rive is CEO (another cousin, Peter Rive, also sits on the board), they and many other executives won’t vote on the agreement.
Electric vehicle manufacturer Tesla announced its intention to buy SolarCity for $2.6 billion in stock in a blog post a little more than a month after it initially proposed the transaction.
SolarCity shares tumbled 6.2 percent to $25.04 in midday trade, while Tesla dipped 0.7 percent to $233.18. Chief Financial Officer Jason Wheeler said the “efficiencies” would include opportunities to use Tesla’s stores and website to sell and market SolarCity services, lower the cost of shared parts and reduce the costs of installation and services.
Tesla, a 13-year-old maker of electric cars and energy storage systems, said Monday that the tie-up would create a one-stop shop for cleaner energy.
SolarCity is expected to report full second-quarter results August 9, while Tesla is scheduled to report its quarterly results on Wednesday.
Tesla first tried to buy SolarCity in June, but the deal sparked scrutiny from Wall Street and concerns over Musk’s personal ties to SolarCity.
The deal, which allows SolarCity to solicit competing takeover offers through September 14, will now go to the shareholders of the companies for approval.
IBD’S TAKE: Tesla shares have been rising, but the stock is well off highs and is losing money.
The share price of SolarCity Corp declined 55.19% for the year.
There was also a special committee formed to separately review the deal without Musk and his close allies’ involvement.
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SolarCity can technically spend the next 45 days shopping around for a better bid from another company, though we doubt it’ll find a better fit than Tesla. In June, Tesla offered 0.122 to 0.131 of its shares for each SolarCity share.
