Tesla Announces Plans To Buy SolarCity For $2.6 billion
Tesla declared this morning that its strategies to purchase solar energy firm Solar City. The two companies hope that joining forces will permit them to scale their battery and solar energy operations, with Tesla explaining the resulting firm as "the world's only vertically integrated sustainable energy company." Buying SolarCity, says Tesla, will permit it to create "fully integrated residential, commercial and grid-scale products" for storing, generating, and distributing solar power.
Tesla said the merger makes the world's only vertically combined sustainable-energy company.\
"Solar and storage are at their best when they're combined," Tesla wrote on its website. "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."
"By joining forces, we can operate more efficiently and fully integrate our products, while providing customers with an aesthetically beautiful and simple one-stop solar (and) storage experience: one installation, one service contract, one phone app," it said. Tesla assumes to achieve cost synergies of $150 million in the first full year after closing.
As part of Musk's Tesla "master plan" published two weeks ago, he said Tesla needed to buy Solar City to combine those offerings.
"Now that Tesla is ready to scale Powerwall and SolarCity is ready to provide highly differentiated solar, the time has come to bring them together," Musk said.
When the companies first declared their intentions to merge in June, Musk said the combination would make selling clean energy "completely seamless, painless. Easy and everything just works. That's what people want."
The offer price of $2.6 billion is lower than-than $3 billion that Tesla firstly declared. Shares of SolarCity have actually rushed over the last few months, so it's not clear why the price tag got cut.
Mr. Musk newly unveiled a strategy document that planned a combined entity that sold solar systems and cars from the same trade stores. The companies said they estimated the transaction to close in the fourth quarter after a 45-day “go shop” period where SolarCity would be open to another proposal for purchase.
If either company backs out of the deal without another offer in place, it would owe the other a $78.2 million termination fee; if SolarCity dismisses the tie-up to enter into another merger before the end the go-shop period, the termination fee allocated to Tesla will be $26.1 million.
SolarCity stocks lost 4.8% to $25.41 in midday trading while Tesla shares edged 0.5% higher to $235.90.
On Wednesday Tesla is planned to report second-quarter financial results after the market closes.