Tesla to buy SolarCity for $2.6 billion

Electric car maker Tesla on Monday announced that California-based solar power company SolarCity has agreed to Tesla's $2.6 billion (2.3 billion euro) takeover bid.

"Solar and storage are at their best when combined," Tesla said in a statement.

"This is really all part of solving the sustainable energy problem," Tesla CEO Elon Musk added during a conference call.

Some Wall Streets analysts have criticized the move, citing a conflict of interest, given that Musk also serves as chairman of SolarCity. The solar panel installer reported a net loss of $769 million in 2015. Musk holds 21.1 percent of Tesla and 22.5 percent of SolarCity. He won't be able to vote as a shareholder on the deal.

Synergies

Musk himself appears to see a congruence of interests between the two companies, not a conflict. Tesla's statement claimed the takeover would create the "world's only vertically integrated sustainable energy company," and help it achieve lower hardware costs and improved manufacturing efficiency.

"We expect to achieve cost synergies of $150 million in the first full year after closing," Tesla said in a statement. "We also expect to save customers money by lowering hardware costs, reducing installation costs, improving our manufacturing efficiency and reducing our customer acquisition costs."

The vast majority of SolarCity's customers have been residential home-owners who allow the company to install solar panels on their rooftops, and then buy the electricity produced at a flat rate.

Tesla said it needed to obtain "regulatory approval and meet other closing conditions" before the takeover could be completed.

Under the agreement, SolarCity has 45 days to solicit alternative proposals. The all-stock transaction would give SolarCity shareholders 0.110 Tesla common shares per SolarCity share.

The takeover bid values SolarCity's shares at $25.37 each, markedly lower than the range discussed in June.

ls/ nz (AFP, AP, Reuters, dpa)