Tesla to buy SolarCity for $2.6 billion in plan to create clean-energy powerhouse
Tesla Motors said it would buy solar panel installer SolarCity Corp. for $2.6 billion in shares to form a one-stop clean-energy shop.
The combined entity will offer consumers solar panels, home battery storage systems and electric cars under a single brand.
Combining the electric car maker with the solar panel installer is a major part of Elon Musk's strategy, who earlier in July unveiled his "Master Plan, Part Deux" that calls for the combined company to offer consumers a single source of hardware to power a low-carbon lifestyle.
Musk is CEO of Tesla, chairman of SolarCity and the biggest shareholder in both companies. A merger agreement had not been certain because SolarCity formed a special committee to review Tesla's offer independent of the influence of Musk and other executives close to him.
The deal includes a "go-shop" provision that will allow SolarCity, which had market value of $2.62 billion as of Friday close, to solicit offers from other buyers through Sept. 14.
Musk has argued that combining Tesla with SolarCity will allow the combined company to reach consumers more effectively, installing solar panels on their roofs, sending power to Tesla storage batteries in their homes, and Tesla cars in their garages. Batteries from Tesla's $5 billion gigafactory outside Sparks, Nev., will be central to the combined enterprises.
Tesla shareholders have gradually warmed up to the deal with SolarCity following initial apprehension after Tesla announced its offer on June 21. After dropping to below $190 per share following the offer, Tesla shares have recovered and ended trading on Friday at $234.79. SolarCity shares closed at $26.70 Friday.
Besides Musk, several Tesla and SolarCity executives, including Musk's cousins, SolarCity CEO Lyndon Rive and SolarCity board member Peter Rive, have recused themselves from voting their shares when the deal comes to a vote.
Tesla is scheduled to release its second-quarter results on Aug. 3.
The company said earlier this month that its deliveries for the quarter fell short of its forecasts. Analysts will be looking for signs that the company is containing its costs and slowing its cash burn.
Tesla took a hit on June 30 when the U.S. National Highway Traffic Safety Administration disclosed it was investigating a fatal accident that killed the driver of a Tesla Model S while he was using the car's Autopilot system, which takes partial control of steering and braking Since then, Musk has defended the Autopilot technology.