Tesla reaches deal to buy So­larCity

The Myanmar Times - - International Business -

ELEC­TRIC car­maker Tesla has won agree­ment from So­larCity to ac­quire the so­lar power com­pany for US$2.6 bil­lion, con­firm­ing a deal that has been crit­i­cised on Wall Street.

Tesla an­nounced the bid in late June, but it drew jeers on Wall Street, in part be­cause of scep­ti­cism over the mo­tives of Tesla chief ex­ec­u­tive Elon Musk, who is also chair­man of So­larCity as well as its big­gest share­holder.

Some an­a­lysts also questioned whether the deal – which still re­quires share­holder ap­proval from both com­pa­nies – would di­vert Tesla’s at­ten­tion from an am­bi­tious plan to sig­nif­i­cantly ex­pand elec­tric-car pro­duc­tion in the next few years.

But Tesla ar­gued the com­bi­na­tion would meet the needs of a grow­ing por­tion of con­sumers who are en­vi­ron­men­tally fo­cused and will be drawn to the op­por­tu­nity to buy their car from the same com­pany that would in­stall a so­lar-pow­ered fu­elling sta­tion at their homes.

Tesla said that the buy­out would also en­able it to achieve lower hard­ware and mar­ket­ing costs and boost man­u­fac­tur­ing ef­fi­ciency, cre­at­ing the “world’s only ver­ti­cally in­te­grated sus­tain­able en­ergy com­pany,” it said in a state­ment.

The all-stock trans­ac­tion val­ues So­larCity at $25.37 a share, be­low the orig­i­nal range dis­cussed in June of be­tween $26.50 and $28.50 a share. The agree­ment al­lows So­larCity to so­licit al­ter­na­tive pro­pos­als for 45 days.

Mr Musk has an­nounced an am­bi­tious goal of pro­duc­ing 500,000 elec­tric cars a year by 2018, which would take it from be­ing a niche pro­ducer of luxury sedans to a main­stream com­peti­tor in the auto in­dus­try.

Tesla re­ported a loss of $282.3 mil­lion in the first quar­ter and has had an­nual losses the last five years. So­larCity lost $21.5 mil­lion in the first quar­ter and also has a record of an­nual losses. –

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