SoylentNews is people
SoylentNews
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: 2) by VLM on Wednesday June 22 2016, @03:31PM
Dunbal more or less hit it out of the park with that one, although there's a side dish that its not just raw capex like new CNC milling machines and buildings, but long term R+D costs and crash test dummies and stuff like that. Cash flow is a pain for all car manufacturers in general.
So there's this awesome car that'll be profitable every quarter on my income sheet and make bazillions over the life of the car model on my balance sheet sitting in my CAD files today, but the revenue isn't going to be rolling in until sales start in 2018 while the engineers want to get a paycheck today and I can't build the prototype until I send digikey the cash for the parts for the worlds newest motor controller or WTF all the above made up but true in spirit.'
Somewhat stereotypically small growing businesses die of cash flow problems, or at least big companies commonly have a lot of company history of barely making payroll despite the income and balance sheets being healthy. Likewise somewhat stereotypically big companies die when their balance sheet rolls over and stops working even when the income and cash flow look good for awhile longer. "Oh look depreciation and environmental regulations mean our former asset of a billion dollar mfgr plant is now worth negative $1M" So its "good news" that their only problem is cash flow. Or they're massaging the message to make people think its the only problem.