Elon Musk’s Tesla to snap up the US’ biggest solar energy provider
Billionaire entrepreneur Elon Musk shocked markets yesterday by announcing plans to merge his electric car maker with America's biggest solar provider.
Tesla Motors wrote in a blog post late last night that it has offered to buy SolarCity in an all-stock deal worth as much as $2.8bn (£1.9bn), more than the solar provider's market capitalisation of $2.1bn.
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Shares in Tesla tanked more than 13 per cent to $189.99 in extended trading, wiping around $4.3bn off of its market value. Nevertheless, the news sent SolarCity's shares about 18 per cent higher to $25.02.
Tesla investors may have shivered at the deal, but Musk, who is its chief exec, chairman of SolarCity and the largest shareholder of both companies, later told reporters that it was a "no brainer".
Tesla customers can drive clean cars and they can use our battery packs to help consume energy more efficiently, but they still need access to the most sustainable energy source that’s available: the sun.
The SolarCity team has built its company into the clear solar industry leader in the residential, commercial and industrial markets, with significant scale and growing customer penetration.
So, we’re excited to announce that Tesla today has made an offer to acquire SolarCity.
Both companies have attained fast growth, however they've had to burn through a lot of cash to achieve this.
Tesla, which had long-term debt and capital leases of $2.5bn as of March 31, sold $1.7bn of shares in May to fund production.
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SolarCity, which has about $6.24bn in liabilities, is expected to burn roughly $400m in cash from operations next year and report an adjusted loss of nearly $1bn based on consensus estimates, according to Reuters.
Musk has said Tesla is about to report its first profit since it was established in 2003, while SolarCity hasn't made an annual profit since its IPO in 2012.