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Lincoln Brown

Lincoln Brown

Lincoln Brown is the former News and Program Director for KVEL radio in Vernal, Utah. He hosted “The Lincoln Brown Show” and was penned a…

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Tesla Looks To Buyout Solar City For $2.8 Billion

Elon Musk has offered Solar City a $2.8 billion purchase proposal in a stock deal that would unite the company with Tesla Motors.

Musk started both companies, and is the majority shareholder in each. Musk also serves as the CEO of Tesla and the chairman of Solar City.

According to Tesla, it offered between $26.50 and $28.50 per share for Solar City stock. Musk said he would recuse himself from voting on the proposal, and Lyndon Rive, who is Musk’s cousin and CEO of Solar City also said he would recuse himself.

Musk did not indicate when shareholders could vote on the move.

Solar City stock closed at $21.19 on Tuesday. Tesla has a market capitalization of $32.7 billion compared to Solar City, which has a value of $2.1 billion. Solar City currently has approximately $62.4 billion in liabilities. In trading, Tesla’s shares dropped 13 percent to $189.99, while stock in Solar City climbed 18 percent to $25.04.

Tigress Financial Partners analyst Ivan Feinseth commented that investors may be expecting Tesla to focus on its business—the manufacturing of electric cars. Feinseth said that investors may be concerned that by venturing into the solar energy industry, Tesla will lose its focus, which could add financial strain to the company. Tesla, said Feinseth, will continue to need a great deal of money. Related: Why We Can Expect Cripplingly Higher Oil Prices In The Near Future

For his part, Musk called the deal a “no brainer” and offered the idea of a package deal in which customers could purchase an electric car, home battery and solar power system at the same time.

While Musk said that Tesla did not know how many customers have solar panels, he said that he suspected that the interest was there.

Solar City leads the nation in rooftop solar systems for homes. However, it also routinely posts quarterly losses, and has seen its stock plummet almost 60 percent this year.

By Lincoln Brown for Oilprice.com

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