Tesla reaches deal to buy SolarCity
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. –