Elon Musk proposed combining the electric-car and solar-energy companies that he backs, the latest in a series of financial shuffles among disparate firms of his empire.
Tesla Motors Inc., Mr. Musk’s Palo Alto, Calif., electric-car company, on Tuesday offered to acquire SolarCity Corp. in an all-stock deal valuing it at up to $2.8 billion. Mr. Musk is the chairman and largest shareholder of both companies.
Tesla shares tumbled 12% in after-hours trading following Mr. Musk’s announcement, while SolarCity shares surged 15%.
Tesla, in a letter to SolarCity Chief Executive Lyndon Rive—also Mr. Musk’s cousin—said its offer represented a value of between $26.50 and $28.50 a share, or a premium of roughly 21% to 30% over SolarCity’s Tuesday closing price of $21.19. The mothers of Messrs. Musk and Rive are twin sisters.
“This is something that we have been thinking about and debated for many years,” Mr. Musk said in a call with reporters Tuesday. “But the timing seemed to be right now” because Tesla is ramping up production of batteries used in conjunction with solar panels, SolarCity’s main business, he said. Mr. Rive on the same call said he was “very excited” about the potential deal, which still requires approval from shareholders.
http://www.wsj.com/articles/tesla-offers-to-acquire-solarcity-1466545551
Investors aren't necessarily thrilled; some view this as a bail-out for the money loser SolarCity, others simply view this as a distraction for Tesla and not the best use of the car marker's capital.
Merge this with another one of my posts, if old.