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The
combined entity would sell solar panels, home battery storage
systems and electric cars under a single brand.
"Solar and storage are at their best when they're combined," the
companies said in a blog post on Tesla's website.
Musk, who is also chairman and a major shareholder in SolarCity,
unveiled an updated "master plan" last month in which he
sketched out a vision of an integrated carbon-free energy
enterprise, offering electric vehicles, car sharing and solar
energy systems.
The deal includes a "go-shop" provision that allows SolarCity to
solicit offers from other potential buyers for 45 days through
Sept. 14.
Up to Friday's close, SolarCity's stock had risen about 26
percent - valuing the company at $2.62 billion - since Tesla
first made an offer on June 21.
The companies said on Monday that SolarCity stockholders would
receive 0.110 Tesla common shares for every share held.
The offer values SolarCity at $25.37 per share, based on the
five-day volume-weighted average price of Tesla shares as of
Friday.
SolarCity had formed a special committee to review Tesla's
initial offer, which was pitched at 0.122 to 0.131 Tesla shares
for each SolarCity share.
SolarCity's shares were down 5 percent at $25.36 in premarket
trading on Monday. Tesla shares were little changed at $234.95.
The deal, expected to close in the fourth quarter, must be
approved by a majority of the disinterested shareholders of
Tesla and SolarCity, the companies said.
Tesla and SolarCity said they expect to save $150 million in
costs in the first full year after deal closes as the
combination improves their manufacturing efficiency and reduces
customer acquisition costs.
The companies said the deal would also save customers money by
lowering hardware costs and reducing installation costs.
Up to Friday's close, Tesla shares had risen 7 percent since the
company first announced the offer.
Tesla's financial adviser was Evercore. Wachtell, Lipton, Rosen
& Katz was its legal adviser. Lazard advised the special
committee of SolarCity's board, while its legal adviser was
Skadden, Arps, Slate, Meagher & Flom.
(Reporting by Swetha Gopinath in Bengaluru; Editing by Saumyadeb
Chakrabarty)
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