Elon Musk’s desire to create a clean energy and transport powerhouse is one step closer after independent board members approved Tesla’s offer to acquire SolarCity last Monday.
The all-stock deal values SolarCity at about $US2.6 billion – which is roughly half what the company was worth just a year ago – with SolarCity stockholders to get a 0.11 share of Tesla for each share of SolarCity, valuing them at $25.83 a share, according to Friday’s closing prices.
Both companies’ share prices fell on news of the deal, with SolarCity stock shedding 7.4 per cent last Monday to close at $US24.72 – a sign, says Reuters, that most shareholders are betting the deal will be approved. Tesla shares closed down 2 per cent at $US230.01.
If the deal is approved by shareholders – a result is expected on this by the fourth quarter – it would double Tesla’s workforce to nearly 30,000 and create a solar, battery storage and transportation powerhouse – the world’s only integrated sustainable energy company, according to Musk.
The merger is also expected to deliver cost efficiencies for Tesla of $US150 million in the first year – a “conservative figure”, the EV and battery maker says – mostly driven by sales and marketing efficiencies, overhead savings and manufacturing efficiencies.
Speaking on an investor call on Tuesday morning, Musk said the deal could also see the Gigafactory workforce double to nearly 10,000 people and triples in output.
Tesla also suggested in the call that around three million customers visit its retail locations every year, offering a great opportunity to both companies for sales channel rationalisation.
But the establishment of an integrated solar and battery storage offering was highlighted as one of the key drivers for the merger, as well as the offer of more integrated products and grid related services to residential and commercial customers.
Tesla also suggested it could potentially look to develop an inverter product in future, further securing its position as a one-stop solar and storage shop.
© 2016 Solar Choice Pty Ltd
