Tesla Motors has signed a deal to buy SolarCity for $2.6bn after announcing the deal in June.
It will be an all stock deal where shareholders of SolarCity will receive a 0.11 share in Tesla for every share held. Each of the shares will be valued at $25.37, which is slightly less than the previously proposed price range.
Tesla offered a price range between $26.5 to $28.5, while announcing its intention to buy the solar solution maker. Tesla Motors, in its official blog, said that solar and storage systems go hand and hand.
At present the electric car maker has plans to extend its product range of Powerwall and Powerpack storage systems while SolarCity has plans to introduce next generation differentiated solar solutions.
Tesla is dreaming to transform it as a carbon-free energy and transport company and the merger will help in offering one-stop solar and storage experience with one installation, one service contract and one phone app.
It also mentioned that the newly formed company could save costs not only from the company’s point of view, but also from customers’ point of view as well. It estimates that the first year saving after the merger would at least be $150m.
Further savings are expected through lowered hardware costs, reduced installation costs, improved manufacturing efficiency and lowering customer acquisition costs.
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The merged SolarCity business could also benefit significantly from the 190 Tesla stores in the US and aboard in several countries, extending its international reach.
The deal also includes a 45 day period ‘go-shop’ provision, which will allow SolarCity to solicit from alternative proposals during the time period.
Both Tesla Motors and SolarCity are confident that the deal will be closed by the end of this year.
