SolarCity to be bought by Tesla in biggest solar-power deal

Mr Elon Musk, chairman of SolarCity and CEO of Tesla Motors, speaks at an energy summit in Manhattan, New York, on Oct 2, 2015.
Mr Elon Musk, chairman of SolarCity and CEO of Tesla Motors, speaks at an energy summit in Manhattan, New York, on Oct 2, 2015.PHOTO: REUTERS

NEW YORK (BLOOMBERG) - SolarCity board members approved a US$2.6 billion (S$3.4 billion) buyout from Elon Musk's Tesla Motors in the solar industry's biggest deal to date.

Tesla agreed to pay US$25.37 a share in stock for the largest U.S. rooftop solar company, according to a statement Monday. Analysts have said the price is too lowand investors have questioned the wisdom of Mr Musk combining his electric-car maker with the clean-energy company. The agreement allows SolarCity to solicit competing takeover offers through Sept. 14, the companies said.

The vote will now go to Tesla and SolarCity shareholders. That excludes Mr Musk, who as chairman and the largest investor in both companies recused himself when he announced the offer June 21. Other SolarCity directors have excluded themselves from voting: Mr Musk's cousins Lyndon and Peter Rive, the co-founders of SolarCity, as well as JB Straubel and Antonio Gracias, who also have ties to both companies.

Mr Musk initially offered SolarCity investors US$26.50 to US$28.50 a share in Tesla stock, saying the combined company would become a clean-energy giant providing electric vehicles powered by solar rooftops and battery storage systems.

SolarCity shares were halted on the news. They had gained 7.4 per cent to US$28.68 before trading stopped at 7:10 a.m. A conference call was scheduled to discuss the merger at 8 a.m. in New York. SolarCity board members Nancy Pfund and Donald Kendall Jr. were chosen to consider Tesla's bid. All the other directors have connections to Tesla. 

"There are tremendous synergies between these two companies," SolarCity CEO Lyndon Rive said in a letter to employees after the deal was proposed.

Tesla rose 1.8 per cent to close Friday at US$234.79. The stock has risen 6.9 per cent since Mr Musk surprised investors with the SolarCity acquisition in June.