Tesla Motors (NASDAQ:TSLA) offered to acquire all of the outstanding shares of SolarCity (NASDAQ:SCTY) in exchange for its common shares. A regulatory filing with the Securities and Exchange Commission (SEC) indicated that electric car manufacturer proposed an exchange ratio of 0.122x to 0.131x shares of Tesla common stock for each share of SolarCity common stock.
The offer represents a value of $26.59 to $28.50 per share or a premium of around 21% to 30% over the closing price of SolarCity’s stock on Monday, June 20.
Tesla believes a merger offers significant benefits to stockholders
Tesla believes that its offer is fair and compelling, and it provides SolarCity stockholders the opportunity to receive its stock at a premium exchange ratio and the opportunity to participate in the success of the combined company.
“We believe that the possibilities for product, service and operational synergies would be substantial, and that a combination would allow our companies to build on our respective core competencies and remain at the forefront of delivering innovative approaches for sustainable transportation and energy. We believe that a combination would generate significant benefits for stockholders, customers and employees of both Tesla and SolarCity,” according to Tesla’s Board.
The electric car manufacturer clarified that its proposal is subject to satisfactory completion of due diligence, the negotiation of mutually agreeable definitive transaction documents, and final approval of its Board. Tesla expressed confidence that it is well-positioned to negotiate and complete the transaction in an expedited manner.
Elon Musk recused himself from voting on the deal
Tesla Chairman and CEO Elon Musk recused himself from voting on the transaction. He also serves as Chairman of SolarCity. He owns 19% of Tesla and 22% of SolarCity.
In a call with reporters, Musk said the deal is a “no brainer” and he believed that acquiring SolarCity would transform Tesla into the “world’s only vertically integrated energy company offering end-to-end clean energy products to our customers.”
The stock price of Tesla declined more than 12% to $192.75 per share during the extended trading hours on Tuesday.