Tesla CEO Expects SolarCity Deal To Pass By ‘Super Majority’

Tesla CEO Expects SolarCity Deal To Pass By ‘Super Majority’
<a href="https://pixabay.com/users/Blomst/">Blomst</a> / Pixabay

Tesla CEO Elon Musk looks quite positive about the SolarCity acquisition. In an interview, he said that despite investor skepticism about the planned deal, he expects a “super majority” of shareholders to support Tesla’s proposed merger with SolarCity, says The Wall Street Journal. Musk said he would include details of the combination in a new “masterplan,” which he wants to publish as early as this week.

Tesla CEO in talks with large Investors

Musk is the largest shareholder in both SolarCity and Tesla, and his proposed merger of the two companies was first presented to investors in late June. However, the proposed deal has been overshadowed by the traffic fatality revelation connected to the company’s Autopilot feature.

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Since Musk announced on Twitter that the masterplan will come soon, it has been the subject of speculations. Musk said in an email that an updated blueprint will include an explanation of how the acquisition of SolarCity would aid in transitioning the automaker into an energy company that specializes in batteries to store and generate power.

Musk is in talks with Tesla’s largest investors, including Fidelity Investments and other big mutual funds. He is urging them to support the acquisition. Musk is not allowed to vote on the deal because of a conflict of interest. Fidelity refused to comment. According to Musk, the most informed investors are supportive of the transaction. He also told The Journal that he had “yet to talk to an investor after I have fully explained the situation and not had them support it.”

Rising confidence on the deal

Must stated that most investors do not understand how bringing together an electric car and solar company made sense from a product standpoint. However, he expects the end result to be a “super majority, a two-third majority in favor” of the acquisition.

Still, one must not forget that after the initial announcement of the deal, Tesla’s stock fell 10%. Thomas Burnett, head of research at Wall Street Access, says investors still view the deal with some risk and skepticism, but in the last several days, there seems to be more confidence. The higher price suggests that investors are becoming more confident that the deal will go through.

“This common ownership is something Tesla is going to take advantage of,” Burnett said.

To acquire SolarCity, the EV maker is proposing to pay $26.50 to $28.50 a share, a premium of up to 30% based on SolarCity’s June 21 stock price. Currently the solar panel company’s board and advisors are reviewing the offer.

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