Elon Musk’s Tesla Motors Inc. reached an agreement to buy SolarCity Corp. for $2.6 billion, about $300 million less than an initial proposal criticized as a “bailout” for the solar company in which he’s the largest shareholder.
SolarCity investors will receive $25.37 a share in stock under the agreement, according to a statement Monday. Musk initially offered $26.50 to $28.50 a share in Tesla stock. Analysts have said in the past that the bid was too low and investors have questioned the wisdom of Musk combining his electric-car maker with the clean-energy company.
The deal, which allows SolarCity to solicit competing takeover offers through Sept. 14, will now go to the shareholders of the companies for approval. Musk, who is chairman and the largest investor in both companies, recused himself from considering whether the deal should be approved by the SolarCity board when he announced the initial bid on June 21. Other SolarCity directors with connections to Tesla and Musk also excluded themselves from voting.
The price is less than half of what SolarCity was trading at the start of the year. The company has seen its share price stumble on concerns of rising costs and slowing growth. The solar panel maker fell 5.6 percent to $25.20 at 8 a.m. in New York. In a separate statement today, SolarCity said installations this year will be in the range of 900 megawatts to one gigawatt, down from prior guidance of at least one gigawatt.
On a call today, SolarCity Chief Executive Officer Lyndon Rive reaffirmed his expectation to become cash-flow positive in the fourth quarter.
SOURCES – Bloomberg