BY Fraser Tennant
In an attempt to create a renewable-energy giant, electric car maker Tesla Motors has made an offer, believed to be in the region of $2.8bn, to acquire solar panel company SolarCity.
According to a statement and a letter to the SolarCity board of directors on the Tesla website, the acquisition proposal consists of an offer to acquire all of the outstanding shares of common stock of SolarCity in exchange for Tesla common shares.
Furthermore, subject to the completion of due diligence, Tesla proposes an exchange ratio of 0.122x to 0.131x shares of Tesla common stock for each share of SolarCity common stock.
Tesla’s proposal represents a value of $26.50 to $28.50 per share, or a premium of approximately 21 percent to 30 percent over the closing price of SolarCity’s shares - based on the closing price (Wednesday 22 June) of SolarCity’s shares and the 5-day volume weighted average price of Tesla shares.
“We believe that our proposal offers fair and compelling value for SolarCity and its stockholders, while also giving SolarCity’s stockholders the opportunity to receive Tesla common stock at a premium exchange ratio and the opportunity to participate in the success of the combined company through their ongoing ownership of Tesla stock”, said Tesla.
Explaining the offer to acquire SolarCity, Tesla said that its mission has always been tied to sustainability, having launched, in March 2015, Tesla Energy, a battery system that allows homeowners, business owners and utilities the opportunity to benefit from renewable energy storage (via its Powerwall and Powerpack home battery solutions).
“It’s now time to complete the picture”, continued Tesla in its statement. “Tesla customers can drive clean cars and they can use our battery packs to help consume energy more efficiently, but they still need access to the most sustainable energy source that’s available: the sun.”
The acquisition of SolarCity, if completed, is expected to yield significant benefits for Tesla’s shareholders, customers and employees.
“Culturally, this is a great fit. Both companies are driven by a mission of sustainability, innovation, and overcoming any challenges that stand in the way of progress. The offer to acquire SolarCity is only the first step toward a successful combination of Tesla and SolarCity”, concluded the Tesla statement.
Entrepreneur Elon Musk, chairman of SolarCity and chief executive of Tesla, this week described the deal as “logical, obvious and a no-brainer.”