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Investors and finanical analysts have been baffled by a $2.86 billion bid by electric car manufacturer Tesla to acquire SolarCity:
Musk, the largest shareholder of both companies, said he and Antonio Gracias, who is also a member of both boards, will recuse themselves from voting on the takeover offer. The all-stock deal is worth $26.50 to $28.50 for each SolarCity share, Tesla said. That calculates to a premium of as much as 35 percent from Tuesday's closing price. The average 12-month price target among analysts surveyed by Bloomberg is $29.82. "In my personal opinion, this is obviously something that should happen," Musk, who is chief executive officer of Tesla and chairman of SolarCity, said in a conference call. "It's a no-brainer." With 100.2 million SolarCity shares outstanding, the offer is worth as much as $2.86 billion.
[...] Tesla fell as much as 12 percent in extended trading while SolarCity rose as much as 29 percent.
(Score: 3, Interesting) by danmars on Wednesday June 22 2016, @03:00PM
I wonder what buzzwords will be trotted out in support of this. What's the logic? That they both can use batteries? So spin the battery division off of Tesla and have them both buy batteries from it, then. Or else make Tesla the battery company and spin off the car division. A car company doing home solar is not something that obviously should happen. Or does Tesla already think of itself as a battery company that happens to sell cars like a Duracell flashlight?
Oh yes, here's Tesla the battery company that sells you all kinds of trinkets that are just showpieces for the battery. A car. Home solar. Maybe next a smartphone, flashlight, or weather radio. Tesla, fine provider of batteries and battery accessories.
(Sorry for the rant.)
(Score: 2) by richtopia on Wednesday June 22 2016, @03:13PM
Tesla sells the Powerwall, and their super charger stations are supposed to have SolarCity cells on the roof. I can see some synergies, however you are correct; the two industries are relatively separated so I'm not sure where there is room to grow.
Tesla is a manufacturing company, and SolarCity is largely a financing company (they don't manufacture cells, just finance and install them). Maybe SolarCity will start giving out autoloans!
(Score: 4, Interesting) by VLM on Wednesday June 22 2016, @03:21PM
My semi serious answer is instead of paying $100K for a roadster and plugging it into a coal power plant, they'll sell package deals of a garage worth of solar cells and some batteries along with the roadster for $150K. I mean you already got them in the showroom, they're already gonna have to hire an electrician to put in the wiring for a fast charger, why not have the guy rough in the solar panels? If you thought your car dealer was a PITA over $800 rustproofing underbody treatments or $400 worth of floor mats at closing time, wait till he tries to slip in a $50K solar panel system at closing.
Also that makes it sticky. So you "need" to socially signal your holiness by being a good acolyte of environmentalism, and here's your highly visible solar panels (and your sexy sports car). But when the car isn't cool anymore or its time for a new one, instead of getting a Porsche this time, well you go these solar panels and those give you twitter and FB street cred so you can't let them go to waste, so I guess you kinda gotta buy sexy electric sports car 2.0, probably from Tesla. You're not buying a sexy sports car for two years, you're buying 25 years of solar panels that kinda sorta need a companion sexy sports car in the garage, conveniently made by Tesla. Like ipod vs itunes and once your itunes account has enough money blown into it, you want to keep using ITMS. I guess I threw out about $200 when I eventually went full android.
The real answer as always is in the financial reports. I have not analyzed them myself but I've read they're both having cash flow sheet problems but are otherwise quite healthy. Musk seems pretty good at running companies into cash flow issues. Whatever plan he's got to fix cash flow issues apparently scales really well with size because he'd prefer running it once on one big company not twice on two smaller companies. Stereotypically I'd say most mergers happen because someone with a sick balance sheet thinks merging with a sick income statement will fix them both or whatever, its usually asymmetric. Its all very alchemical like brewing a magic potion. Also modern management is only about as effective as alchemy or astrology in practice. So its unusual but not unheard of for two companies both with similar problems to merge. Noteworthy and unusual but not unheard of. Anyway I look forward to seeing what his plan is.
(Score: 2) by bob_super on Wednesday June 22 2016, @04:13PM
I'll add that people leasing from SolarCity will likely be told regularly how well the new Tesla matches their system, or how it could be expanded to fit a bigger one.
Also, using your Tesla as a Powerwall can make sense, based on your driving habits (a convenient app to know you need the full charge on mistress-Wednesday only). And that's easier done if it's the same company.
(Score: 4, Insightful) by Anonymous Coward on Wednesday June 22 2016, @05:03PM
Please drop such tripe as "So you "need" to socially signal your holiness by being a good acolyte of environmentalism". Every area in life has its annoying people, religious evangelists, politic-heads, gun enthusiasts, etc. Obviously you've been annoyed by the environmental trend, but it really is a factual necessity. I would argue that supporting environmentalism in general is being a sensible human being concerned with future survival.
Are there ridiculous examples of environmentalism being stupid? Sure. Should you go mocking a large section of humanity because you have some gripes? No. That is the path of prejudice, where you slide people into your own mental categories to reinforce your worldview.
(Score: 0) by Anonymous Coward on Thursday June 23 2016, @03:32AM
The best part about VLM's post complaining about people needing to signal attitudes that he disagrees with is that he's signaling how great he thinks he is by whining about them. He is literally exactly what he is complaining about. Too fucking clever for his own good.
(Score: 2) by frojack on Wednesday June 22 2016, @05:29PM
But look, they are moving in the opposite direction. Towards a 35-thousand-ish priced car.
The market for people wanting to spend 100k on a car is very small. The market for people buying a 35K car and tossing in another 10 or 20K for home charging all under the same car/home loan.
No, you are mistaken. I've always had this sig.
(Score: 2) by VLM on Wednesday June 22 2016, @09:44PM
That is insightful, think about some random dude buying a generic sedan that happens to be electric.
Now the electrician has to come out and install a fast charger station and thats costing some serious bucks, too much to roll into the car and hope the bank doesn't notice and too small to pay the enormous fees and paperwork of a home equity loan.
But... what if they're like, so dude, why pay $2K for a charger and electrican and buried lines to the garage if you can take out a loan for $10K and cut, not raise, your electric bill using solar panels all while installing the charger you need anyway? I could see that package deal selling pretty well. The bank that gives the loan for the car is chill, the bank that loans the panels is chill...
(Score: 2) by Gravis on Wednesday June 22 2016, @08:51PM
Tesla sells directly to the consumer, so there is no car dealer bullshit. Frankly, I hope Tesla puts car dealers out of business. ;)
(Score: 3, Insightful) by Anonymous Coward on Wednesday June 22 2016, @03:23PM
Tesla, fine provider of batteries and battery accessories.
Actually, when you put it in this context, it makes more sense. This is exactly the business model that Honda uses. They develop engines well, and they make all sorts of products that make use of their core strength: Automobiles, Motorcycles and Scooters, Airplanes, Boat Outboard motors, Lawnmowers and Snowblowers, Electrical Generators and more. Seems to be working for Honda. Maybe it makes even more sense that Tesla follow the same model in markets with fewer competitors than Honda has to face in all of their markets.
(Score: 3, Insightful) by VLM on Wednesday June 22 2016, @03:43PM
I'd agree with and extend your remarks with the example of General Electric. One decade they're making electric motors and alternators, next thing you know they're making home appliances with motors in them, then somehow they start squirting out MRI machines (not entirely sure how that happened).
Another example of vertical integration would be good ole Standard Oil.
As a tech analogy I'd propose Microsoft. Superficially spreadsheets, video game consoles, and mice do not seem to have anything in common to an end user, but there are similarities in the core technologies of those products. MS is an example of the arrow of time in business where nobody would believe the story if run in reverse; if a startup today said their stated goal was to sell wineglasses, pesticides, and gray market non-FCC or UL listed cellphone chargers, everyone would WTF although its not unlikely if one of today's startups lives long enough it could end up selling that stuff. Actually I think I just described amazon.com. Whatever.
(Score: 3, Interesting) by fritsd on Wednesday June 22 2016, @04:29PM
Maybe they want to become a conglomerate like Schlumberger [wikipedia.org] (but then with the "evil bit" turned off)?
A colleague of mine once worked for Schlumberger. She said it was an astonishingly large and powerful corporation, that almost nobody has ever heard of. They're never in the news.
Have you ever seen any news about Schlumberger? They're in the S&P 100, and active in 85 countries. If you want to drill for oil, you need them. But there's no news about them.
(Score: 2) by takyon on Wednesday June 22 2016, @05:41PM
Musk is building the ultimate vertical monopoly. Battery production, solar panel production [technologyreview.com], home solar financing via SolarCity, home battery packs to store the solar energy, and electric cars. And finally, SpaceX rockets for when you decide you want to die on Mars.
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(Score: 2) by takyon on Wednesday June 22 2016, @05:56PM
When I read your post, I immediately thought of Halliburton [wikipedia.org]. And would you look at that, it's in the same sector: "Oilfield services & equipment". Both companies provided services to the Deepwater Horizon oil rig. Halliburton would not be a household name if it weren't for its former CEO becoming the U.S. Vice President.
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(Score: 0) by Anonymous Coward on Wednesday June 22 2016, @06:32PM
I interviewed with them once when I was straight out of the military, when oil was booming.
They paid to fly me to their training site, put me up in a Hilton for a week, and had open bar each night.
Looking into them for the interview I was super surprised I had never heard of them. They are huge.