“We are pleased to submit to you and the SolarCity board of directors a proposal to acquire all of the outstanding shares of common stock of SolarCity in exchange for Tesla common shares,” the company writes in a letter announcing the proposed deal.
Rather than paying cash, Tesla is offering a stock-swap deal at a premium of about 21 to 30 percent over SolarCity’s closing price.
The deal values SolarCity at about $2.6 to $2.8 billion.
In a conference call with reporters, Musk called the proposed deal “an incredibly compelling solution,” and outlined his plan should the deal go through: eventually, SolarCity products would be offered under the Tesla brand, and customers will be able to purchase them in Tesla stores.
Tesla has shown increasing interest in the general energy business. In May of last year, the company announced Tesla Energy, a program that offered battery systems to homes and businesses.
The company has also been working to fully open its ambitious Gigafactory battery plant – and has set plan for a grand opening next month – creating more overlap between the two companies’ businesses.
Both companies could use batteries produced by the factory, Musk said in one instance of how the deal could work.
Musk said “there are benefits to sharing knowledge on the manufacturing front,” but the deal would otherwise not effect manufacturing plans.
“I think it’s kind of an obvious thing to do,” Musk said about the deal.
SolarCity and Tesla shareholders apart from Musk will still need to vote on the deal. Musk said a due diligence process will first take place, but apart from that, the timing of the deal remains unclear.
Source: The Verge