Thursday, November 17, 2016

Tesla Seals $2 Billion SolarCity Deal

Deal overcame mixed recommendations by advisory firms

Tesla Motors Inc. and SolarCity Corp. shareholders approved the electric-car maker’s purchase of the solar installer....

More than 85 percent of Tesla shares voted in favor of the deal.... The deal, valued at about $2 billion, integrates the maker of Model S and upcoming Model 3 sedans with the installer of rooftop solar panels.

Shareholders are signing off on Musk’s plan to combine and more efficiently run two companies that have a track record for fleeting profits and frequent fundraising needs. Tesla has lost about $4.8 billion in market capitalization since its initial offer to buy SolarCity on June 21, while the latter company’s value declined by about $86 million.

Tesla has forecast SolarCity will add $1 billion in revenue to the combined company next year and $500 million in cash to its balance sheet over the next three years. Joining Tesla’s retail network with SolarCity’s installers and consolidating the two companies’ supply chains may result in an estimated $150 million in cost synergies within a year.

Musk owns 21 percent of Tesla and 22 percent of SolarCity, making him the largest shareholder of both companies.... The all-stock deal is worth $20.23 per share, a premium of 2 percent based on SolarCity’s closing price Wednesday. The premium was about 35 percent when first announced.

Tesla rose 2.6 percent to $188.66 at the close Thursday, while SolarCity gained 2.9 percent to $20.40.
The quarterly profit Tesla reported last month was the first for the ... company in eight quarters. SolarCity has recorded losses in six of the last eight quarters....

Investor Jim Chanos ... has been highly critical of the merger in part because of the $2.89 billion in SolarCity debt Tesla will be taking on.

by Dana Hull danahull and Chris Martin cleantechchris
Press Release dated November 17, 2016

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