Tesla Signs Deal To Buy SolarCity For $2.6 Billion

Tesla is buying Solar City for $2.6 billion in an all-stock deal.

In the announcement, Tesla said it hopes to scale its platform from just battery-powered cars and energy storage systems to a fully integrated sustainable energy company offering a one-stop shop for going green.

But Tesla defended the logic of creating a single company to boost solar generation and storage to power electric cars, charging stations, homes and offices.

Musk stated in his blog (Master Plan, Part Deux) that the mission was to “Create a smoothly integrated and lovely solar-roof-with-battery product that just works, empowering the individual as their own utility, and then scale that throughout the world”. Before then, the deal must be approved by a majority of Tesla and SolarCity shareholders. SolarCity’s chief executive Lyndon Rive and Mr Musk are cousins.

The deal represents a marriage between two companies overseen by Elon Musk.

SolarCity, which was founded in 2006 and headquartered in San Mateo, has a 45-day “go-shop” period to seek an alternative suitor.

Tesla expects the transaction to close in the fourth quarter of the year.

Under the all-stock deal, SolarCity shareholders will receive 0.110 Tesla common shares. Incidentally, Musk is the biggest shareholder in both Tesla Motors Inc. and SolarCity Corp. Musk will pay himself a large amount of Tesla shares in exchange for SolarCity shares.

The takeover bid values SolarCity’s shares at $25.37 each, markedly lower than the range discussed in June.

“Solar and storage are at their best when they are combined”.

Tesla said the two firms will save up to $150m (£113m) on operating cost in the first year after the acquisition.

Musk has positioned the merger as an essential step in his masterplan, which involves the development of an integrated solar panel and battery product based on the Powerwall. The company is also reportedly interested in ride-sharing services, which could rival Uber and Lyft. The company also needs regulatory approval and must conform to other closing conditions before going ahead.