Tesla Motors Inc, SolarCity Corp Approaching Merger Deal

Updated on

Electric carmaker Tesla and solar panel installer SolarCity are reportedly close to agreeing a merger deal.

Tesla CEO Elon Musk is a major shareholder in both companies, and sources say that discussions about a merger are at an advanced stage. With due diligence almost complete there could be a deal in the next few days, but there is also a chance that the talks end without an agreement, according to Reuters.

Reports claim deal could be reached imminently

There has been no confirmation whether SolarCity would implement a go-shop provision in any agreement. If the company were able to do so it would be able to receive other bids from different suitors for an agreed period of time.

The sources cited by Reuters spoke on condition of anonymity, and representatives for Tesla and SolarCity did not make any comment.

The all-stock offer was announced by Tesla last month, and is worth $2.8 billion. The thinking from Musk is that a merger would be able to offer complete clean energy solutions under one roof, with solar panels, home battery storage and electric cars available from one brand.

On June 27 SolarCity announced that it had set up a special committee of two board members who would be responsible for evaluating the offer. There have been no announcements on the subject since that date aside from the news that legal and financial advisers had been retained.

Several board members will not vote

Musk will not vote on the merger at either company. His cousins, SolarCity CEO Lyndon Rive and SolarCity board member Peter Rive, have also recused themselves from any vote due to their interests in both companies.

On July 20 Musk spoke of his “part deux” master plan for Tesla, which involves a “smoothly integrated and beautiful solar-roof-with-battery product.”

“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,” Musk said.

The Tesla CEO claims that he has had great success in convincing investors to support the idea.

“The most informed investors are highly supportive of the transaction,” Mr. Musk said. Last week he claimed that he had “yet to talk to an investor after I have fully explained the situation and not had them support it.”

Mr. Musk predicts that “the end result will be a supermajority, a two-thirds majority” in favor of the deal.

Leave a Comment