Tesla and SolarCity merge for $2.6 billion
The Silicon Valley electric car maker, Tesla Motors Inc recently announced the merger of SolarCity with it. SolarCity is a prime rooftop solar installer. The two companies agreed to merge at a price of $2.6 billion. Tesla's offer to SolarCity came into the news in June.
The companies issued a joint statement. They said the solar energy and storage would do awesome if combined. That's what the merger aims at.
The two companies combined for a definite cause. They hope for a single company that can create household renewable energy saving batteries. Also, they want some cars that can run on it.
Elon Musk, the CEO of Tesla would chair the SolarCity. The deal had all the stocks of SolarCity. The shares valued $25.37. The shareholders of SolarCity would get 0.11 share of Tesla for each share of SolarCity. The deal would get closed in the fourth quarter of 2016. It is subject to regulatory approval and voting by the shareholders.
The two firms hope to earn nearest to $150 million revenue in cost synergies in the first year. The company awaits the closure of the deal.
The CEO on a conference call said that deal is a part of solving the sustainable energy problem. The firms are trying to elevate the advent of sustainable energy into the world. This merge would be a big step in doing so.
The merge targets at providing solar and battery combinations to its 3 million customers from its 190 stores. The announcement showed a graphic representing the motive of the merger.
The SolarCity CEO says the combination would provide cheaper energies than the traditional ones.
Sceptics questioned the deal as the stocks of Tesla fell after the announcement. But Musk defended the contract as he says it's long-term vision for cleaner and cheaper energy. Musk calls the deal his master plan.
Lst year Tesla unleashed Powerwall, a home battery. SolarCity reacted immediately. It disclosed its intentions to install it in home solar arrays. By the end of the present decade, SolarCity wants deploy batteries for all its solar power systems.
The problem is becoming bigger with Carbon content well past 400 PPM in the atmosphere. There are no clear ways to combat pollution. There is no clear idea about the time and technology needed. Tesla and SolarCity have made a high point in the direction.
Tesla also recently set up its Gigafactory. It's a gigantic solar covered installation for storage solutions. The factory will produce lithium ion batteries on a mass scale. These cells would be used in homes and electric vehicles. The plant will decrease the cost and increase the volume of cells.
Musk in a blog says, "Sustainable energy is not some silly, happy thing. It matters to all."
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