Tesla and SolarCity agree on merger terms in $2.6 billion all-stock deal

(credit: Lawrence Berkeley Labs)

On Monday morning, Tesla announced that it has come to an agreement with SolarCity. Tesla will buy the company in an all-stock deal that would give 0.11 shares of Tesla stock to investors for every share of SolarCity sick they own. The Wall Street Journal estimates this would make the deal worth $2.6 billion.

On a phone conference early this morning, Tesla CEO Elon Musk-who is also a chairman on SolarCity's board and who is cousins with the SolarCity CEO, Lyndon Rive-said the deal would create a "stronger balance sheet" for both companies and allow the two businesses to build an integrated product that combines electric vehicle charging, solar power, energy storage, and installation and servicing of the whole system.

In a press release from Tesla, the company said that a merger could generate $150 million in "cost synergies" in the first full year after the deal closes. Executives from both Tesla and SolarCity said those synergies would come from decreased marketing expenses and the ability to leverage Tesla's retail footprint by selling SolarCity panels in Tesla stores, as well as reducing the cost to service customers by consolidating service visits.

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