Just over a month ago, Tesla made a proposal to purchase SolarCity and now it's official.
The two companies have reached an agreement to combine, creating what they call "the world's only vertically integrated sustainable energy company." As one company, officials say Tesla (storage) and SolarCity (solar) can fully integrate their products, while providing customers with a simple, one-stop experience: one installation, one service contract, one phone app.
This is an all-stock transaction with an equity value of $2.6 billion based on the 5-day volume-weighted average price of Tesla shares as of July 29. Under the agreement, SolarCity stockholders will receive 0.110 Tesla common shares per SolarCity share, valuing SolarCity common stock at $25.37 per share based on the 5-day volume weighted average price of Tesla shares as of July 29.
As part of the agreement, SolarCity has a 45-day period known as a "go-shop," which runs through September 14. This means that SolarCity is allowed to solicit alternative proposals during that time.
As a combined business, officials say they expect to save $150 million in the first full year after closing, while customers will save money through lower hardware and installation costs.
While the agreement is a big step, the transaction is not expected to close until the fourth quarter of 2016. Before then, the deal must be approved by a majority of the disinterested shareholders of both Tesla and SolarCity voting at each shareholder meeting. Also needed are regulatory approval and other closing conditions.
