At the end of June, Musk stated that he is considering placing the two companies under the same roof as part of his overall strategy of creating a one place pit stop for clean energy and green cars. SolarCity’s chief executive Lyndon Rive and Mr Musk are cousins. Tesla’s statement claimed the takeover would create the “world’s only vertically integrated sustainable energy company”, and help it achieve lower hardware costs and improved manufacturing efficiency. The deal will have to be approved by a majority of shareholders of both companies.
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SolarCity said it now expects to install enough solar panels to generate between 900 megawatts and 1,000 megawatts of electricity, down about 10 percent from its previous forecast of 1,000 megawatts to 1,100 megawatts.
But it seems those who are on board with the merger says the plan makes sense, as it would let customers buy single units to “generate solar power from Tesla rooftop installations, store the energy in Tesla batteries and transfer the energy into their Tesla electric cars”.
Mr Musk has previously described the deal as a “no brainer”. Shares of SolarCity fell almost 5 percent on the news, as the price tag was about $300 million less than Tesla offered in June.
Under the agreement, there will be a “go-shop” provision, which means Solar City has 45 days, until September 14, to see if they get a better offer than Tesla’s offer.
Here are some key terms of today’s announcement: this is an all-stock transaction with an equity value of $2.6 billion based on the 5-day volume-weighted average price of Tesla shares as of July 29, 2016. Meanwhile, the solar rooftop manufacturer’s share value rose nearly 5 percent during the same timeframe.
Tesla anticipates $150 million in costs savings in the first full year after closing of any tie-up with SolarCity. Now the world is one step closer to the clean energy super company that could result from such a merger. In June, Tesla offered 0.122 to 0.131 of its shares for each SolarCity share.
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Pfund, a managing partner at the venture capital company DBL Investors, was an early backer of both Tesla and SolarCity, and served as an observer on Tesla’s board before its initial public offering.
