SolarCity Agrees to Tesla’s $2.6 Billion Deal

The entirely stock-based deal between the two companies puts quite a pretty penny on SolarCity, with a valuation that comes in at a hefty $2.6 billion. Shares of SolarCity fell almost 5 percent on the news, as the price tag was about $300 million less than Tesla offered in June. It’s expected to close in the fourth quarter if it goes through.

“The potential is there for Tesla to be a $1 trillion market cap company if we play a major role in transitioning the world to a new form of energy generation, and storage and transport”, Musk told investors. The combined entity will offer consumers solar panels, home battery storage systems and electric cars under a single brand. This merger would also double Tesla’s workforce to almost 30,000. According to Tesla, the deal could represent $150 million in cost savings during the first full year after the deal closes, which is nothing to scoff at.

Others have questioned the conflicts of interest in the deal. Shares of Tesla and SolarCity were both down slightly in trading today. Tesla shares plummeted in the weeks following the initial announcement.

“Solar and storage are at their best when they’re combined”, the companies explain in the blog.

“The point of the merger is to get rid of the conflicts”, he said.

“We want to have batteries deployed with all of our solar power systems by the end of the decade”, Peter Rive, SolarCity’s co-founder, told me then. That doesn’t appear to have made Musk donate a rat’s ass, because, of course, the deal is going ahead.

Tesla said the two firms will save up to $150m (£113m) on operating cost in the first year after the acquisition. This means one company will be able to provide solar and storage with one installation, one service contract and one phone application, Tesla says. Tesla previously said it would offer $23.56 to $25.30 per SolarCity share.

The boards of directors of each company have signed off on the deal.

“We can’t do this well if Tesla and SolarCity are different companies, which is why we need to combine and break down the barriers inherent to being separate companies”.