Tesla Acquires SolarCity in $2.6 Billion Deal

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Tesla said Monday it has agreed to an all-stock $2.6B merger with Solar City, with the ultimate aim of “creating the world’s only vertically integrated sustainable energy company.”

Tesla’s offer is roughly half of SolarCity’s value last year, a reflection of the steep decline in the company’s growth within the said period.

Both SolarCity and Tesla have a significant amount of money within the past year. Solar City lost nearly $60 million and Tesla lost nearly $900 million. Elon Musk, who happens to be the chairman of both SolarCity and Tesla, is the largest shareholder in the two companies, and owns more than 20 percent of both companies.

Speculations abound as to the true reason for merging both companies at this time. According to Mr. Musk, the merger makes sense as it will save SolarCity from bankruptcy, and also “lowering hardware costs, reducing installation costs, improving manufacturing efficiency and reducing customer acquisition costs.”

According to Musk, the merger will allow the companies offer customers “an aesthetically beautiful and simple one-stop solar + storage experience: one installation, one service contract, one phone app.”

On the other hand, it might be a positioning strategy to ready Tesla in the event of a future acquisition by a larger company.

The transaction is expected to close the fourth quarter of 2016, based on both shareholder and regulatory approval.