The great Elon Musk empire is uniting. Today his electric car and battery company Tesla announced its offer to acquire his solar panel installation company SolarCity. Together the companies could allow you to outfit your home with solar panels that power a giant battery for everything inside as well as your electric car.
The deal still has to be approved by SolarCity and its board. If it goes through, it would see SolarCity stock exchanged for Tesla stock. The deal would pay a premium of 21% to 30% on top of SolarCity’s value of $2.14 billion, so Tesla would be buying SolarCity for between $2.59 billion and $2.78 billion worth of its stock.
Recently SolarCity had its value downgraded, making it an easier acquisition target. SolarCity’s share price skyrocketed 20% in after-hours trading as soon as the announcement hit. That means the premium on SolarCity’s value has been instantly cut much smaller in after-hours. Meanwhile, Tesla’s share price dropped 11% in after-hours trading.
Musk will recuse from voting on the acquisition, as will Tesla and Solar City board member Antonio Gracias. However, Tesla says it only wants to make the acquisition if it’s friendly, not a hostile take-over.
The Tesla team writes “It’s now time to complete the picture. 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.”
Tesla outlined the reasoning behind why the acquisition makes sense:
“We would be the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers. This would start with the car that you drive and the energy that you use to charge it, and would extend to how everything else in your home or business is powered. With your Model S, Model X, or Model 3, your solar panel system, and your Powerwall all in place, you would be able to deploy and consume energy in the most efficient and sustainable way possible, lowering your costs and minimizing your dependence on fossil fuels and the grid.”
As if people thousands of years from now weren’t already going to be speaking the name “ELON MUSK”.