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Tesla Offers To Buy SolarCity

ggnykk

Active Member
Feb 7, 2016
1,573
807
Earth
Tesla Makes Offer to Acquire SolarCity

Tesla Makes Offer to Acquire SolarCity
The Tesla Team June 21, 2016
Tesla’s mission has always been tied to sustainability. We seek to accelerate the world’s transition to sustainable transportation by offering increasingly affordable electric vehicles. And in March 2015, we launched Tesla Energy, which through the Powerwall and Powerpack allow homeowners, business owners and utilities to benefit from renewable energy storage.

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.

The SolarCity team has built its company into the clear solar industry leader in the residential, commercial and industrial markets, with significant scale and growing customer penetration. They have made it easy for customers to switch to clean energy while still providing the best customer experience. We’ve seen this all firsthand through our partnership with SolarCity on a variety of use cases, including those where SolarCity uses Tesla battery packs as part of its solar projects.

So, we’re excited to announce that Tesla today has made an offer to acquire SolarCity. A copy of Tesla’s offer is provided below.

If completed, we believe that a combination of Tesla and SolarCity would provide significant benefits to our shareholders, customers and employees:

  • We would be the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers. This would start with the car that you drive and the energy that you use to charge it, and would extend to how everything else in your home or business is powered. With your Model S, Model X, or Model 3, your solar panel system, and your Powerwall all in place, you would be able to deploy and consume energy in the most efficient and sustainable way possible, lowering your costs and minimizing your dependence on fossil fuels and the grid.
  • We would be able to expand our addressable market further than either company could do separately. Because of the shared ideals of the companies and our customers, those who are interested in buying Tesla vehicles or Powerwalls are naturally interested in going solar, and the reverse is true as well. When brought together by the high foot traffic that is drawn to Tesla’s stores, everyone should benefit.
  • We would be able to maximize and build on the core competencies of each company. Tesla’s experience in design, engineering, and manufacturing should help continue to advance solar panel technology, including by making solar panels add to the look of your home. Similarly, SolarCity’s wide network of sales and distribution channels and expertise in offering customer-friendly financing products would significantly benefit Tesla and its customers.
  • We would be able to provide the best possible installation service for all of our clean energy products. SolarCity is the best at installing solar panel systems, and that expertise translates seamlessly to the installation of Powerwalls and charging systems for Tesla vehicles.
  • Culturally, this is a great fit. Both companies are driven by a mission of sustainability, innovation, and overcoming any challenges that stand in the way of progress.
Today’s offer to acquire SolarCity is only the first step toward a successful combination of Tesla and SolarCity. We will provide a further update if and when an agreement is reached.

June 20, 2016

Mr. Lyndon R. Rive
Chief Executive Officer
SolarCity Corporation
3055 Clearview Way
San Mateo, CA 94402

Dear Lyndon:

We are pleased to submit to you and the SolarCity board of directors a proposal to acquire all of the outstanding shares of common stock of SolarCity in exchange for Tesla common shares. Subject to completing due diligence, we propose an exchange ratio of 0.122x to 0.131x shares of Tesla common stock for each share of SolarCity common stock. This proposal represents a value of $26.50 to $28.50 per share, or a premium of approximately 21% to 30% over the closing price of SolarCity’s shares, based on today’s closing price of SolarCity’s shares and the 5-day volume weighted average price of Tesla shares. We believe that our proposal offers fair and compelling value for SolarCity and its stockholders, while also giving SolarCity’s stockholders the opportunity to receive Tesla common stock at a premium exchange ratio and the opportunity to participate in the success of the combined company through their ongoing ownership of Tesla stock.

The board of directors of Tesla is excited at the prospect of a potential combination of SolarCity’s business with Tesla. 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.

We are committed to a possible transaction that is fair to SolarCity’s and Tesla’s respective stockholders. To help ensure that, Tesla is prepared to make the consummation of a combination of our companies subject to the approval of a majority of disinterested stockholders of both SolarCity and Tesla voting on the transaction. In addition, as a result of their overlapping directorships, Elon Musk and Antonio Gracias have recused themselves from voting on this proposal at the Tesla board meeting at which it was approved, and will recuse themselves from voting on this proposal at the SolarCity board as well. We believe that any transaction should be the result of full and fair deliberation and negotiation by both of our boards and the fully-informed consideration of our respective stockholders.

Our proposal is subject to the satisfactory completion of due diligence, the negotiation of mutually agreeable definitive transaction documents, and final approval by the Tesla board. While a transaction would be further subject to customary and usual closing conditions, we believe that Tesla is well positioned to negotiate and complete the transaction in an expedited manner. We do not anticipate significant regulatory or other obstacles in consummating a mutually beneficial transaction promptly.

In light of Elon Musk’s SEC disclosure obligations in his individual capacity as a stockholder of SolarCity this proposal will be publicly disclosed, but Tesla’s intention is to proceed only on a friendly basis.

We look forward to discussing a potential transaction with you, and hope to expeditiously enter into a definitive agreement.

Sincerely,

The Board of Directors of
Tesla Motors, Inc.
 

Cosmacelf

Well-Known Member
Supporting Member
Mar 6, 2013
10,260
30,830
San Diego
In listening to the webcast this morning, sounds like a Powerwall/inverter/solar panel integration is a major reason for the deal. They are realizing that Powerwall V2.0 needs to have an integrated inverter, and Elon now says that some sort of integrated solar panel/inverter/Powerwall system is possible and needed.

Not sure where this leaves SolarEdge? Is Solarcity going to build in SolarEdge optimizer into their panels? Or are they going to build their own? And who builds these Powerwall/Solarcity inverters?
 

cpa

Active Member
May 17, 2014
3,583
5,227
Central Valley
I think this is part and parcel of Tesla's ongoing mission. A completely revolutionary way to reduce grid dependence.

OK, so don't shoot me: Several years from now Tesla Motors will have a variety of models, including but not limited to the S, X, III, pick-up, cargo van, low-end sedan and maybe even light delivery vehicles. Once the automobile manufacturing side of things becomes profitable, I think Elon & Co. will either sell off or split off the automobile manufacturing division. I do not think Tesla wants to be in the auto business for the long haul with its sales and service centers, ongoing software updates, manufacturing headaches, customer complaints, etc.

Solar panel manufacturing and installation paired with battery manufacturing and installation is a much easier row to hoe. Fewer breakdowns, fewer ongoing costs to maintain. I would suspect that the gross profits will be higher too, and there will be less overhead.

If BEVs from other manufacturers start selling in modest numbers, DC fast charging will become mandatory throughout the globe, both locally and for long-distance travel. I could foresee that massive solar displays combined with significant battery storage will power not only Superchargers but all other really fast DC charging stations that have yet to be introduced. I would suspect that in another 15 years technology will have charging rates that will be at least 50% greater than Superchargers today, reducing a 30-40 minute session to a more tolerable 20-25.

It makes perfect sense for Solar City and Gigafactory batteries to be at the forefront of this concept.

Then, I believe all DC fast charging will be fee-based.
 

Skotty

2014 S P85 | 2020 3 P19"
Jun 27, 2013
2,584
2,030
Kansas City, MO
I think this is part and parcel of Tesla's ongoing mission. A completely revolutionary way to reduce grid dependence.

I don't see any need to reduce grid dependence, and I don't really consider it part of Tesla's mission. The need is to switch to clean and sustainable energy, whether that involves the grid or not.
 
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ItsNotAboutTheMoney

Well-Known Member
Jul 12, 2012
12,453
11,034
Maine
I don't see any need to reduce grid dependence, and I don't really consider it part of Tesla's mission. The need is to switch to clean and sustainable energy, whether that involves the grid or not.

Dependency on the grid is dependency on utilities, and the utilities stand in the way of the mission of sustainable energy and sales of BEVs. Solar can be a way to drive down prices.
 

Skotty

2014 S P85 | 2020 3 P19"
Jun 27, 2013
2,584
2,030
Kansas City, MO
Dependency on the grid is dependency on utilities, and the utilities stand in the way of the mission of sustainable energy and sales of BEVs. Solar can be a way to drive down prices.
In general, I think utilities are a good thing. Public sewer, water, power, police and fire protection, even the Internet. These are all services I don't want to have to maintain myself. Power needs to be cleaned up, but that could easily be done at the utility scale. I consider it unfortunate that power utilities and regulations are not moving on this need to where people feel it is necessary, myself included, to act on our own and install rooftop solar. We'll do it if we have to, but distributed power generation is not the end objective; clean sustainable power is the end objective. That was the distinction I was trying to emphasize, anyway.
 
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Reducing grid dependency becomes important when utilities (i.e. Nevada, Arizona) de-incentivize rooftop solar. If they won't play fair, then it is incumbent upon solar power producers to reduce their connection with the grid. Consumers increasing energy independence by using a combination of solar panels, EV's and power-walls should encourage utilities to embrace the movement toward a decentralized, sustainable energy infrastructure.
 

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