Tesla Motors said Monday that it had reached a deal to acquire SolarCity, putting the companies one step closer to an marriage that has drawn scrutiny from Wall Street but which Tesla CEO and SolarCity Chairman Elon Musk has vigorously defended.
Tesla (TSLA) said the stock acquisition is worth $2.6 billion, including the assumption of debt, valuing SolarCity shares at $25.37, or 5% lower than Friday’s close.
SolarCity (SCTY) will get 45 days to seek an alternative suitor in a provision known as a “go-shop” period.
Musk argued that the deal would accelerate Tesla’s transition from electric-vehicle automaker into a fully integrated, renewable-energy products company. With solar-panel installer SolarCity on board, Tesla could integrate solar cells onto the roofs of its vehicles and pair solar panels with its new energy storage products.
“This is really all part of solving the sustainable energy problem,” Musk said on a conference call.
For an executive who has long viewed Tesla’s trajectory through an ambitious lens aimed at combating climate change by ushering in a renewable energy world, the SolarCity deal is a key part of the puzzle.
“This is an action now which is anticipating several moves ahead,” Musk said.
Not unexpectedly, Musk has thrown the full force of his persuasive personality behind the acquisition. But Tesla said the independent board members of both companies had voted to authorize the deal, meaning Musk did not cast a ballot.
A majority of each company’s independent shareholders must also vote to approve the acquisition, which Tesla expects to close in the fourth quarter.
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SOURCE: USA Today, Nathan Bomey