A month after Tesla proposed buying SolarCity, the two sustainability-focused companies have agreed to merge in an all-stock deal valued at $2.6 billion. Elon Musk is the chairman of both companies and remains the largest shareholder of both.
In the announcement, Tesla said it hopes to scale its platform from just battery-powered cars and energy storage systems to a fully integrated sustainable energy company offering a one-stop shop for going green. Tesla is getting ready to scale up its energy storage platform and sees SolarCity as a primary viaduct for its business.
By joining forces, we can operate more efficiently and fully integrate our products, while providing customers with an aesthetically beautiful and simple one-stop solar + storage experience: one installation, one service contract, one phone app.
We expect to achieve cost synergies of $150 million in the first full year after closing. We also expect to save customers money by lowering hardware costs, reducing installation costs, improving our manufacturing efficiency and reducing our customer acquisition costs. We will also be able to leverage Tesla's 190-store retail network and international presence to extend our combined reach.
SolarCity has a 45-day period in which it can entertain other offers, but executives expect to close the deal in the fourth quarter of 2016.