Tesla Motors is making a bid to buy SolarCity in a deal valued at more than $2.6 billion that would bring the solar panel factory now being built in South Buffalo under the control of entrepreneur Elon Musk and his vision for sustainable energy and electric cars.
The all-stock offer to buy SolarCity, made after the stock market closed on Tuesday, would allow Musk to gain control of a company where he already is the biggest individual shareholder and its chairman. It also would add a new twist to the family ties that dominate SolarCity’s upper management: Musk is the cousin of Lyndon Rive, SolarCity’s CEO, and Peter Rive, Lyndon’s brother and SolarCity’s chief technology officer.”
“I’m really excited about this,” Lyndon Rive said in an email to SolarCity employees after the Tesla bid was disclosed. “There are tremendous synergies between these two companies.”
The merger proposal also would allow Musk to consolidate his growing stake in SolarCity at a time when the solar energy systems installer’s stock is beaten down. SolarCity’s stock has lost 62 percent of its value over the past year as the company repeatedly missed its growth targets and struggled with state regulatory policies that sometimes limited the solar energy industry’s growth potential.
The offer would pay SolarCity shareholders a premium of 21 percent to 30 percent from Tuesday’s closing share price of $21.39. The all-stock offer would pay SolarCity shareholders in Tesla stock worth $26.50 to $28.50 per share.
SolarCity shares rose 18 percent, or $3.75, to $24.94 in after-hours trading.
Tesla said combining the two companies would expand the markets for both, broadening the sales channels for the electric cars that Tesla makes to include SolarCity’s customer base, while allowing Tesla to market SolarCity’s solar energy systems to Tesla’s already environmentally conscious customers. SolarCity already uses Tesla’s Powerwall batteries in its early-stage systems to add batteries to its solar energy systems so residents can store power during the day and use it at night or at other times when the sun isn’t shining.
“When brought together by the high foot traffic that is drawn to Tesla’s stores, everyone should benefit,” Tesla said in a blog post.
“We would be the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers,” Tesla said. “This would start with the car that you drive and the energy that you use to charge it, and would extend to how everything else in your home or business is powered.”
“Culturally, this is a great fit,” Tesla said.