Published: Thu, August 11, 2016
Economy | By Melissa Porter

Elon Musk sells SolarCity to Tesla

Tesla announced Monday morning its plans to acquire SolarCity in a $2.6 billion all-stock transaction. SolarCity sells solar energy systems to homeowners, businesses and government organizations, and Tesla makes high-end all- electric cars.

"It's really all part of solving the sustainable energy problem", Mr. Musk said. "That's why we are all doing this to accelerate the advent of a sustainable energy world".

Tesla is buying SolarCity for $2.6 billion, pushing ahead with Elon Musk's vision to create a one-stop shop for clean energy. Tesla founder and CEO Elon Musk first mooted the tie-up in June.

The deal also would combine two companies that already are closely intertwined, which has raised concerns among some analysts and investors.

Under the agreement, there will be a "go-shop" provision, which means Solar City has 45 days, until September 14, to see if they get a better offer than Tesla's offer. But a majority of each company's independent shareholders must approve the acquisition, which Tesla expects in the fourth quarter. Shares of SolarCity fell almost 5 percent on the news, as the price tag was about $300 million less than Tesla offered in June. The move comes a month after the electric vehicle maker first announces plans to acquire the company.

Shares in Tesla rose US0.09 to US234.80 in morning trading in NY, but SolarCity's stock fell US1.39, or 5.21%, to US25.31.

"Now is the right time to bring our two companies together", the blog post stated.

Musk said, "That [Telsa and SolarCity] are separate at all, despite similar origins and pursuit of the same overarching goal of sustainable energy, is largely an accident of history". SolarCity shares fell 3.8% to $25.70.

Automotive company Tesla specialises in electric cars and batteries.

In addition to shareholder approval, both companies must receive regulatory approval.

Musk seems confident about achieving cost synergies of $150 million in the first full year after closing the merger.

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