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Tesla has gotten the approval of the Federal Trade Commission to acquire solar panel maker SolarCity. The anti-trust regulator said that approval was quick, because the two companies had almost no overlaps in their businesses. A spokeswoman for the target company said the deal could close by the end of this year.
Tesla first announced its plan to buy SolarCity in late June, in a bid to create a sort of one-stop-shop for renewable power, energy storage, and electric vehicles. The initial offer was between US$26.50 and US$28.50 per share in an all-stock deal that would have valued SolarCity at up to US$2.8 billion. Later, however, the companies agreed on US$2.6 billion, or US$25.83 per SolarCity share.
SolarCity, one of the biggest rooftop solar panel providers in the U.S. has, like its peers, suffered the fallout of the oil market depression, which made renewable energy less appealing. Posting a series of quarterly losses, the company has seen its shares plunge by 60 percent since the start of the year.
Elon Musk, who serves as chairman of SolarCity and is the largest single shareholder in SolarCity and Tesla, called the deal a “no brainer” with a view to his one-stop shop vision, saying it will allow Tesla to offer its customers everything from a car, an energy storage system for their house or business, and solar panels to power those houses and businesses. In the sale call with reporters, Musk admitted that he has no idea how many of the current Tesla customers have solar panels on their rooftops, but suggested most of them would be interested in such renewable solutions, perhaps by association with electric vehicles.
The tie-up will also expand the two partners’ markets, Tesla said in an update on the official announcement of the deal, adding that it expects cost synergies of US$150 million within the first year after closing, plus lower costs for customers.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.