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Tesla Motors takes US$2,6bn shine to SolarCity Corp

Last updated: 01:13 02 Aug 2016 AEST, First published: 20:13 01 Aug 2016 AEST

Tesla electric car
California-based Tesla is known for its electric cars

US electric car maker Tesla Motors Inc (NASDAQ:TSLA) is buying solar panel developer SolarCity Corp (NASDAQ:SCTY) for £2bn in a renewable energy mega-deal.

Tesla said SolarCity investors would get 0.110 Tesla common shares for every share they hold, valuing SolarCity at US$25.37 per share.

Tesla will have a 93.5% stake in the merged company and SolarCity 6.5% under the terms of the deal, which should get approval in the fourth quarter.

California-based Tesla is known for its electric cars but since last year has also been selling batteries for residential and commercial use.

It plans to bring together SolarCity’s solar panels and its home and business battery storage systems and electric vehicles under a single umbrella.

Tesla chief executive Musk is also the chairman of SolarCity and is the largest shareholder in both companies.

The car maker said it expects to save US$150mln in the first year as well as efficiency improvements from the tie-up, while beefing up the pair’s combined balance sheet.

Tesla said in a statement: "Solar and storage are at their best when they're combined.

"As one company, Tesla (storage) and SolarCity (solar) can create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed.

"By joining forces, we can operate more efficiently and fully integrate our products."

Shares in Tesla rose US$0.09 to US$234.80 in morning trading in New York, but SolarCity's stock fell US$1.39, or 5.21%, to US$25.31.

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