Tesla says it has reached agreement to purchase SolarCity for US$2.6bn to create what it maintains is the world's only vertically integrated sustainable energy company.
"Solar and storage are at their best when they're combined," noted a Tesla statement. "As one company, Tesla [storage] and SolarCity [solar], can create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed.
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"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.
"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 plus storage experience: one installation, one service contract, one phone app.
"We expect to achieve cost synergies of US$150m in the first full year after closing. We also expect to save customers money by lowering hardware costs, reducing installation costs, improving our manufacturing efficiency and reducing our customer acquisition costs. We will also be able to leverage Tesla's 190-store retail network and international presence to extend our combined reach."
The deal is an all-stock transaction with an equity value of US$2.6bn based on the five-day volume-weighted average price of Tesla shares as of 29 July, 2016.
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By GlobalDataAs part of the agreement, SolarCity has a 45-day period known as a 'go-shop', which runs to 14 September 14, meaning SolarCity is allowed to solicit alternative proposals during that time. Each company has filed a Form 8-K with the SEC that provides additional details regarding the transaction.
"We expect the transaction to close in the fourth quarter of 2016," added Tesla. "Before then, the deal must be approved by a majority of the disinterested shareholders of both Tesla and SolarCity voting at each shareholder meeting.
"We also need to obtain regulatory approval and meet other closing conditions."
