Tesla Motors Inc. (TSLA) announced today it will acquire solar panel company SolarCity (SCTY) for $2.6 billion in an all-stock transaction.
Tesla said it hopes the deal will create the world’s first vertically integrated sustainable energy company. “Now is the right time to bring our two companies together: Tesla is getting ready to scale our Powerwall and Powerpack stationary storage products and SolarCity is getting ready to offer next-generation differentiated solar solutions,” Tesla said in a statement on its website.
“By joining forces, we can operate more efficiently and fully integrate our products, while providing customers with an aesthetically beautiful and simple one-stop solar + storage experience: one installation, one service contract, one phone app.”
The $2.6 billion tag equates to a purchase price of $25.37, meaning every SolarCIty shareholder will receive 0.110 Tesla share for every share held. In July, Tesla made an offer of 0.122 to 0.131 shares for every SolarCity share.
Tesla expects the deal to result in $150 million of cost synergies in the first year after the acquisition through the lowering of hardware and installation costs.
As part of the deal, SolarCity has a 45 day period, known as a “go-shop” provision, in which they are allowed to seek alternative proposals.
Tesla said it hopes to have the deal finalized in the fourth quarter of 2016.
