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As will no doubt be reported everywhere shortly, Tesla and SolarCity have reached a deal for Tesla to buy SolarCity. The Wall Street Journal says, "The all-stock deal values SolarCity at about $2.6 billion, with SolarCity stockholders receiving 0.11 share of Tesla for each share of SolarCity, valuing them at $25.83 apiece, according to Friday's closing prices. The deal's value comes in lower than the original range of $26.50 to $28.50 per share Tesla had proposed in June. Mr. Musk said Monday he wasn't involved in talks about the valuation of the purchase."
Electric vehicle maker Tesla expects to achieve "significant" cost savings and "dramatic improvements" in manufacturing efficiency as a result of the acquisition of solar panel installer SolarCity, Tesla Chief Executive Officer Elon Musk said on Monday.
Musk said the combined companies will have a "stronger balance sheet," but likely will require a "small equity capital raise" next year. Both companies have been burning through cash and have projected achieving positive cash flow later this year.
Musk is the largest shareholder in both companies and is chairman of SolarCity. His cousins Lyndon Rive and Peter Rive are co-founders of SolarCity.
Source: Reuters
Additional reporting here and here.
(Score: 3, Insightful) by frojack on Tuesday August 02 2016, @03:55AM
Musk repeated that if the deal is consummated, the combined Tesla-SolarCity could require a "small equity capital raise" next year.
Translation:
They will have to issue more stock to cover the cash-burn that the battery factory is costing them. That depresses the value of all existing shares proportionally.
If SolarCity changes its business model (which is basically a roof-rental in exchange for slightly cheaper power) they might actually sell enough systems to make that big battery plant profitable. But as it works now, they are financing way too much of each installation. And nobody's really sure of how much they are paying for solar arrays.
No, you are mistaken. I've always had this sig.