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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: 0) by Anonymous Coward on Wednesday June 22 2016, @05:59PM
I saw an article which said exactly this was going to happen. Maybe it was a few months ago? Maybe I am remembering a bunch of articles all globbed together?
It was making a case for the stock value of each of his entities (SpaceX, Tesla and SolarCity) being a house of cards and, as each company lost the credibility to justify the negative cash flows, Elon Musk would start folding his companies together to keep the valuation up. I googled the article but now I cannot find it. Anybody else remember this article?
(Score: 2) by takyon on Wednesday June 22 2016, @06:18PM
Sounds like a SeekingAlpha [seekingalpha.com] type of article, but I don't see much.
A custom date range on Google from sometime to June 1, 2016 may help you find it. Here's an older article:
https://www.zacks.com/stock/news/209430/is-elon-musk-buying-solarcity [zacks.com]
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 1, Informative) by Anonymous Coward on Wednesday June 22 2016, @06:58PM
Ok I think it was a WSJ article... here's a link with a blurb and link back to the original WSJ article. Sorry I do not have my WSJ login handy so no copy pasta on the article itself.
The gist is that he is taking out personal loans backed by his own shares in Tesla and Solar City to finance operations at those companies. Logically, a significant drop in stock value is going to cause a margin call... that may not hurt him too much directly; however, indirectly, I do not think the effect on the share price of Elon Musk selling off significant shares in his companies to pay margin calls can be underestimated. Remember, Tesla and SolarCity are running on the faith investors have in their future ability to generate profits. He is very sensitive to cash flows as they are still mostly in the R&D stage for the product everybody is anticipating, the "mainstream" priced all-electric Model 3. Any crimp in their cash flow could set them back years on their production schedule; a margin call that dries up cash for a quarter could potentially tank the company in this scenario.
FT.com [ft.com]
WSJ.com [wsj.com]