SolarCity Corp. agreed to Tesla Motors Inc.’s US$2.6 billion offer to buy the solar panel installer, the companies said.
Tesla’s offer represented about half of SolarCity’s value a year ago, a tumble reflecting the solar company’s slowing growth, complex financial structure and the increased scrutiny of government incentives for rooftop solar, Reuters reports.
For Tesla, acquiring SolarCity offers the promise of greater economies of scale in electrical energy management systems, battery production and marketing, the news agency said.
Standard & Poors said Monday it put Tesla’s credit ratings on CreditWatch with negative implications “to reflect the significant risks related to the sustainability of the company’s capital structure following the proposed transaction”.
Tesla’s stock swap offer valued SolarCity at US$25.37 a share, or US$200 million less than the initial proposal Musk outlined in June, before advisers to the companies had done due diligence.
SolarCity shares shed 7.4 per cent on Monday to close at US$24.72, a level that suggests most shareholders are betting the deal will be approved. Tesla shares closed down 2 percent at US$230.01.
SolarCity has come under pressure from rivals offering low-cost solar energy from large, utility-scale installations, and because some state governments have reined in subsidies that encouraged rooftop solar.
Tesla said in a regulatory filing it would issue shares as part of the transaction.
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