In June, Elon Musk’s firm, Tesla, put in a bid to buy Elon Musk’s other firm, SolarCity.
That bid has now been accepted and will see Tesla acquiring Solar City for R36 billion ($2.6 billion).
Last month Musk revealed, as part of his master plan, that now was the right time for Tesla and SolarCity to join forces. Tesla reiterated this in its announcement that the bid had been accepted.
“Solar and storage are at their best when they’re combined. 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,” it said.
Tesla expects that the two companies combined will achieve cost synergies of R2.08 billion ($150 million) in the first, complete year of trading together. It believes that this can be achieved by leveraging Tesla’s existing retail chain and international presence.
This deal doesn’t come cheaply though.
The all-stock deal is valued at R36 billion based on the 5-day volume weighted price of Tesla shares for the 29th of July. Under the agreement, SolarCity shareholders will recieve 0.110 Tesla common shares (valued at R353,47 ($25.37)) for every SolarCity share they own.
The deal isn’t done until the ink has dried
The deal also contains a clause in which SolarCity is permitted to “go-shop” for a better deal. The firm is permitted to do this until 14th September 2016.
There’s also the matter of obtaining regulatory approval, approval from shareholders and other conditions required to secure the deal.
Tesla has said that should everything go according to plan and there are no hiccups along the way, the two firms should be batting for the same team before the end of the year.
At this stage however, it all seems to be a go for Elon Musk to combine his two firms.
[Source – Tesla] [Image by CC 2.0 – Maurizio Pesce]