Tesla Motors Inc TSLA has made an offer to acquire SolarCity Corp SCTY.
"We are pleased to submit to you and the SolarCity board of directors a proposal to acquire all of the outstanding shares of common stock of SolarCity in exchange for Tesla common shares," Tesla's board said in a letter to SolarCity CEO Lyndon Rive. "Subject to completing due diligence, we propose an exchange ratio of 0.122x to 0.131x shares of Tesla common stock for each share of SolarCity common stock. This proposal represents a value of $26.50 to $28.50 per share, or a premium of approximately 21% to 30% over the closing price of SolarCity's shares, based on today's closing price of SolarCity's shares and the 5-day volume weighted average price of Tesla shares."
SolarCity shares traded at $25.90, up 22 percent in the after-hours session. Tesla shares traded at $198.70, down more than 9 percent.
The letter continued, "We believe that our proposal offers fair and compelling value for SolarCity and its stockholders, while also giving SolarCity's stockholders the opportunity to receive Tesla common stock at a premium exchange ratio and the opportunity to participate in the success of the combined company through their ongoing ownership of Tesla stock."
Separately, Tesla made a post on its blog.
"It's now time to complete the picture. Tesla customers can drive clean cars and they can use our battery packs to help consume energy more efficiently, but they still need access to the most sustainable energy source that’s available: the sun. The SolarCity team has built its company into the clear solar industry leader in the residential, commercial and industrial markets, with significant scale and growing customer penetration. They have made it easy for customers to switch to clean energy while still providing the best customer experience."
Elon Musk co-founded SolarCity in 2006 and is its largest shareholder. For Tesla, he led the Series A round of investment in February 2004, joining Tesla's board of directors as its chairman. He become CEO in 2008.
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