Tesla Motors, the electric vehicle and battery company headed by Elon Musk, has made a $2.8 billion bid to acquire SolarCity, the sustainable energy company of which Musk is chairman and controlling shareholder.
Making the case in a blog post on Tuesday, Tesla said its mission has always been tied to sustainability. The company launched Tesla Energy in March and said now it’s time to complete the picture.
The SolarCity team has built its company into the clear solar industry leader in the residential, commercial and industrial markets, with significant scale and growing customer penetration. They have made it easy for customers to switch to clean energy while still providing the best customer experience. We’ve seen this all firsthand through our partnership with SolarCity on a variety of use cases, including those where SolarCity uses Tesla battery packs as part of its solar projects.
SolarCity stock soared 18 percent on the offer after hours and Tesla shares dropped as much as 10 percent. Musk said in a conference call that the two sets of shareholders will vote on the merger independent of Musk after a due diligence process, CNBC reported.
Twitter, of course, reacted with a fair share of mocking skepticism:
Musk announces that Musk will review Musk's offer to buy Musk's company, says Musk. $TSLA $SCTY
— The Daytrade™ (@d4ytrad3) June 21, 2016
Just when you thought $TSLA was an auto company, it makes bid to buy SolarCity. $TSLA down 10% after hours, $SCTY is up 20%
— Phil LeBeau (@Lebeaucarnews) June 21, 2016
https://twitter.com/spencerrascoff/status/745375281125330944
The red flags flying around this $TSLA / $SCTY are so many it’s hard to count. Hey, Tesla holders, did you want to invest in an “energy co”?
— Herb Greenberg (@herbgreenberg) June 21, 2016
$SCTY was going bankrupt this year, with a $700 million cash burn/qtr. $TSLA now assumes that cash outflow. Wow. This is a desperate move.
— Diogenes (@WallStCynic) June 21, 2016
“It improves the efficiency of the setup,” Musk said of the proposed deal. “Instead of having, say, three different trips to a house to put in a car charger and solar power and a battery pack, you can actually integrate that into a single business.”
Musk said SolarCity products would be brought under the Tesla brand if the deal goes through.
USA Today reported that shares of SolarCity are down more than 60 percent this year “as investors grow tired of the company’s growing losses.” The company lost $61.8 million over the past 12 months, the newspaper said.
