Breaking: Tesla Motors Inc. acquires SolarCity for $2.6 Billion
Earlier today, Elon Musk’s Tesla Motors Inc. finalized a deal to acquire SolarCity for $2.6 Billion. This marks a milestone for Musk who seeks to combine both the solar-energy company and electric company. Way back in June, talks were beginning to acquire SolarCity with a deal evaluated at a range of $26.50 to $28.50 per share. According to The WallStreet Journal, the all-stock deal values SolarCity at about $2.6 Billion. Stockholders of SolarCity received 0.11 a share of Tesla Motors for every share of SolarCity Corp. which were priced at $25.83 on Friday’s market closing. Musk is the largest shareholder of both companies owning 20% of the shares for each.
During a conference call, an analyst asked Musk about the company valuation and he said, “I know about as much as you do about how the price was obtained.” Musk was apparently not involve with talks during the deal.
The WallStreet Journal stated that if the deal were to be approved by shareholders, Tesla Motors would grow to 30,000 employees. The acquisition doubles Tesla’s workforce. From a statement, a joint company between SolarCity Corp. and Tesla Motors Inc. would yield $150 Million in cost savings. This is true for the first year upon reaching and finalizing the transaction. This massive reduction in costs is heavily due to SolarCity relying and using the strong consumer recognition of Tesla and its enormous retail store locations.
When asked about the prospects of the deal, Musk seemed to be optimistic. “I think $150 million is conservative…I think we will significantly exceed that in the first year,” Musk said.
Currently, Tesla Motors is valued at $34.7 Billion and dwarfs SolarCity at $2.6 Billion. Due to investor skepticism, shares of Tesla Motors dropped 10% and questioned the benefits of the deal. However, Musk discussed with investors and assured them about the expansion of the Tesla brand as a whole.
Elon Musk’s Tesla Motors is reshaping the automobile industry and is slowly shifting the gears of the oil dependent world towards sustainable energy.