Tesla and SolarCity Agree On A $2.6 Billion Merger
Elon Musk, who will be leading the two companies and is also the largest shareholder in both, has taken the first step from Tesla’s second master...
Elon Musk, who will be leading the two companies and is also the largest shareholder in both, has taken the first step from Tesla’s second master plan, which he released a couple of weeks ago.
Elon Musk’s vision of combining his two companies, Tesla and SolarCity, to speed up sustainable energy production is finally seeing the light of the day. Tesla has proposed an all-stock deal to SolarCity with an equity value of $2.6 billion.
In the second part of Tesla’s master plan, which was revealed last month, Musk had mentioned that Tesla is ready to scale the Powerwall and Powerpack storage products, while SolarCity is almost ready to offer next-generation solar panels. Merging the two will result in all the products involving operations – generation, storage and transportation – coming from a single company, Tesla. Customers can also have a hassle free experience because of one installation, one service contract, and one phone app.
Musk seems confident about achieving cost synergies of $150 million in the first full year after closing the merger. The overall cost of ownership is also expected to go down with the reduction in hardware and installation cost. Moreover, the company is eager to leverage Tesla showrooms around the world (190-store retail network in the US) to extend their combined reach.
Speaking about the agreement terms, SolarCity stockholders will receive 0.110 Tesla common shares per SolarCity share, valuing SolarCity common stock at $25.37 per share based on the 5-day volume weighted average price of Tesla shares as of July 29, 2016.
Check out what else Musk’s second master plan has in store beside the Tesla and SolarCity merger in – Elon Musk Outlines Tesla's Future In Master Plan 2