Tesla is dreaming to transform it as a carbon-free energy and transport company and the merger will help in offering one-stop solar and storage experience with one installation, one service contract and one phone app.
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Elon Musk is the chairman of both companies and remains the largest shareholder of both.
Two of Elon Musk’s tech ventures, Tesla and SolarCity, have reached an agreement to combine their businesses and operate as a single entity in a deal worth $2.6bn.
By doing this, the solar PV installer says that it can reduce costs to the extent of $150m in the first year of closing.
In addition to the luxury electric vehicles it has become known for, Tesla also manufactures a home energy storage system created to complement renewable power generators such as solar cells.
Tesla will have a 93.5% stake in the merged company and SolarCity 6.5% under the terms of the deal, which should get approval in the fourth quarter. Before then, the deal must be approved by a majority of Tesla and SolarCity shareholders.
In the statement which announced the merger, the companies said: “Now is the right time to bring our two companies together: Tesla is getting ready to scale our Powerwall and Powerpack stationary storage products and SolarCity is getting ready to offer next-generation differentiated solar solutions”.
The all-stock transaction has an equity value of $2.6 billion based on the five-day volume-weighted average price of Tesla shares as of July 29.
Kevork Djansezian/Getty Images Elon Musk, the CEO of Tesla, announces $2.6B deal with SolarCity on August 1. Mr. Mok has reaffirmed a Hold rating on SolarCity stock, while he has not provided any rating on Tesla stock.
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The deal also contains a clause in which SolarCity is permitted to “go-shop” for a better deal.
