Tesla Motors Inc.’s lowered $2.6 billion bid for SolarCity Corp.is unlikely to draw a competing offer for the largest US solar power supplier, two analysts said.
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Analysts have said the price is too low, and investors have questioned the wisdom of Musk combining his electric-car maker with the clean-energy company. 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. “As one company, Tesla (storage) and SolarCity (solar) can create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed”, Tesla noted.
Tesla predicts that “cost synergies” from the two companies working together will be around $150m in the first 12 months, and it is also expected that customers will save money due to lower hardware costs, reduced installation costs and manufacturing efficiency.
The Tesla-SolarCity agreement involves an all-stock transaction that values SolarCity at $25.37 a share, which works out to $200 million less than the price that was set last month.
Last month, Musk unveiled his “Master Plan” plan which laid out a vision of an integrated carbon-free energy enterprise, offering electric vehicles, auto sharing and solar energy systems.
“We expect the transaction to close in the fourth quarter of 2016”, added Tesla.
SolarCity has a 45-day “go-shop” period to solicit deals for more eager buyers, though a withdrawal from the deal would cost executives up to $78.2 million in fees. Considering that Musk is the chairman of both companies and his cousins run SolarCity, it seems unlikely that the solar energy company will land with anyone else. Tesla could integrate solar cells onto the roofs of its vehicles and pair solar panels with its energy storage products. Aside from its full-force attack on the world of transportation as we know it, Tesla has also been focusing on creating massive battery packs to change the way homes and other structures receive their electricity.
Musk initially offered $26.50 to $28.50 a share in Tesla stock, Bloomberg reported.
SolarCity, shares were down 5.1 percent at $25.34, while Tesla dropped 1.9 percent at $230.40.
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Tesla’s stock is up a bit from the news, up 0.2 percent to 5.30.
