Tesla moves to acquire SolarCity, but investors balk
Tesla Motors [NSDQ:TSLA] on Tuesday made the surprise announcement 聽it is seeking to acquire solar panel installation firm SolarCity via a share swap聽deal.
The two companies are already closely linked with Tesla CEO and Chairman Elon Musk also Chairman of SolarCity. Musk is also SolarCity鈥檚 biggest investor and a cousin of SolarCity CEO and co-founder Lyndon Rive.
At the current market price, Tesla鈥檚 offer values SolarCity shares at between $26.50 and $28.50, which represents a 21-30 percent premium. Tesla shareholders still need to approve the deal and because of his links with SolarCity Musk won鈥檛 take part in the vote.
Analysts have questioned Tesla鈥檚 reasoning in acquiring SolarCity, a company which like Tesla is losing money and has substantial debts. And in after-hours trading Tesla鈥檚 share price dropped as much as 10 percent, slipping below $200 for the first time since March.
Speaking to investors, Musk said the move was a 鈥渘o brainer鈥� as Tesla could then provide direct to its customers not only an electric car but also the solar panels to generate the electricity the car runs on and a home energy storage system to keep any excess electricity.
Tesla in May 2015 revealed its home energy storage system,聽, which eventually will use聽batteries聽sourced from the company鈥檚 own聽.
In its statement about the acquisition of SolarCity, Tesla said the deal, if approved, would make it the 鈥渨orld鈥檚 only vertically integrated energy company offering end-to-end clean energy products to our customers.鈥�
It鈥檚 this statement that highlights the potential for Tesla to disrupt the energy industry, which is right up there with food and health when it comes to the world鈥檚 biggest. In Musk鈥檚 view, the energy would be free but Tesla would be providing the panels to capture it, the batteries to store it, and the products to utilize it.
