Elon Musk's Tesla Plans To Acquire Elon Musk's SolarCity For $2.7B In Stock (techcrunch.com)

An anonymous reader writes from a report via TechCrunch: Today, Elon Musk's electric car and battery company Tesla has announced its offer to buy solar panel installation company SolarCity. Now is a better time than ever to acquire SolarCity, as it recently had its value downgraded. If Tesla does acquire SolarCity, the companies could allow you to outfit your home with solar panels that power a giant battery for your various appliances, such as an electric vehicle. The deal, which has yet to be approved by SolarCity and its board, involves SolarCity's stock being exchanged for Tesla stock. TechCrunch reports that "the deal would pay a premium of 21% to 30% on top of SolarCity's value of $2.14 billion, so Tesla would be buying SolarCity for between $2.59 billion and $2.78 billion worth of its stock." The Tesla team writes, "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." Elon Musk has also been in the news today through OpenAI, the artificial-intelligence non-profit backed by Elon Musk, Amazon Web Services and others. OpenAI announced it is working on creating a physical robot that performs household chores.

Comments

I need to see the negotiations

[Anonymous Coward]

Elon Musk: So do we have a deal?

[Elon gets up from his seat at one end of a massive conference table where he is flanked by lawyers, and walks around to the other end, where he sits down, flanked by other lawyers.]

Elon Musk: We have an agreement.

[Elon Musk gets up, crosses to the middle of the room, and shakes his own hand to the cheers of his fellows.]

New Name...

[Thelasko]

Musk Industries.

This is common in Silicon Valley

[comrade1]

It's common for a successful company to buy out investors in an unsuccessful company as a way to move value out of the sham higher value company directly into the lower value company, because, of course, they'd rhe same investors. It's a way to get a pay off early without selling off your tesla stock. Same thing happened with the YouTube buyout by Google. The VC firm that funded both companies wanted a payoff even though at the time the deal made no sense.

Re:This is common in Silicon Valley

[kwerle]

Yeah - it's a shame that deal didn't work out for any of the involved parties.

Re:This is common in Silicon Valley

[rtb61]

It is really all about the concept of a residential power solution. You can not sell just a branded battery, with a hodge podge for everything else, the panels, the inverter and the installation. To properly brand and create the concept of a long term investment, that the next property buyer can have confidence in, you need a single branded system. So it is say a, Tesla 1000X power system, with a long term investment value of ? depreciating annually at ? or a Tesla 10,000XXX system, all done by licensed installers with the entire system backed by warranties. This versus a hodge podge of unknown Chinese panels and a Mexican inverter, hooked up to a Tesla battery (all hooked up by unknown backyarders), what is that system worth on the resale of a house, how much do you devalue the worth of the battery, especially in terms of marketing versus what you can promote in resale terms with a complete branded system. So not just the value of the electricity you are generating but also the added resale value of your property, giving real worth to that investment.

So straight up economic and marketing sense, it was bound to happen. Keep in mind all the other major home power solutions manufacturers will do the same thing for the same reasons. You must sell a complete package, including regulated installations to ensure you can market and promote the long term investment of a home power solution.

Re:So where does mr. Elon Musk figure in all this?

[binarylarry]

From the tone of the article, I think Elon Musk might be involved behind the scenes, pulling the strings.

Only time with tell.

Re:So where does mr. Elon Musk figure in all this?

[Anonymous Coward]

And both companies have never been profitable.

SolarCity is an interesting enterprise. Its existence is wholly dependent on federal and state subsidies, more than $400 million in federal tax credits so far. Since the company is the one that owns the solar equipment, it gets the subsidy rather than their residential and business customers with 20 year leases. They don't even have their own installers, they contract for that service and they have a significant number of cases with incorrect installations. It is a great scam.

Re:So where does mr. Elon Musk figure in all this?

[ShanghaiBill]

This is how you cash in. Use stockholder money to buy your own company.

This is a stock transaction. No money is changing hands.

Re:So where does mr. Elon Musk figure in all this?

[Anonymous Coward]

Profit is only one part of the equation. Both companies have been channeling their resources into expansion and their net worth is now measured in billions of dollars. Teslas Gigafactory alone is expected to be worth $5 Billion. As far as subsidies, try to find a major company that doesn't receive significant tax breaks from the government. Boeing alone has received $13 Billion over the last decade or so.