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[Guevara]

Elon Musk proposed combining the electric-car and solar-energy companies that he backs, the latest in a series of financial shuffles among disparate firms of his empire.

Tesla Motors Inc., Mr. Musk’s Palo Alto, Calif., electric-car company, on Tuesday offered to acquire SolarCity Corp. in an all-stock deal valuing it at up to $2.8 billion. Mr. Musk is the chairman and largest shareholder of both companies.

Tesla shares tumbled 12% in after-hours trading following Mr. Musk’s announcement, while SolarCity shares surged 15%.

Tesla, in a letter to SolarCity Chief Executive Lyndon Rive—also Mr. Musk’s cousin—said its offer represented a value of between $26.50 and $28.50 a share, or a premium of roughly 21% to 30% over SolarCity’s Tuesday closing price of $21.19. The mothers of Messrs. Musk and Rive are twin sisters.

“This is something that we have been thinking about and debated for many years,” Mr. Musk said in a call with reporters Tuesday. “But the timing seemed to be right now” because Tesla is ramping up production of batteries used in conjunction with solar panels, SolarCity’s main business, he said. Mr. Rive on the same call said he was “very excited” about the potential deal, which still requires approval from shareholders.

http://www.wsj.com/articles/tesla-offers-to-acquire-solarcity-1466545551

Investors aren't necessarily thrilled; some view this as a bail-out for the money loser SolarCity, others simply view this as a distraction for Tesla and not the best use of the car marker's capital.

Merge this with another one of my posts, if old.

 

[ExVicis]

Uh, what? You can do that?

 

[Guevara]

Uh, what? You can do that?

Sure, a public company can buy another public company, as long as the shareholders approve of the deal.

 

[FyreWulff]

Uh, what? You can do that?

yes. in fact a lot of companies use the "install our employees on another company's board" strategy for buyouts/takeovers. He just happens to already be in-place on both.

 

[NihonTiger90]

I think it makes sense, but it could be seen as a bailout of Solar City, too.

 

[therealist]

Bad news for Tesla, Solar City is a weak company.

Great news for Solar City, Solar City is a weak company.

 

[Jimrpg]

As much as I love Elon, SolarCity doesn't seem to be working out, and this might just be one way to stop the bleeding by combining and reducing overheads in both companies.

Not a bad strategy to buy when SolarCity has lost nearly 66% of its value in the last year.

If you've been waiting to buy Tesla shares, now's the time, it dropped 12% overnight.

 

[Guevara]

As much as I love Elon, SolarCity doesn't seem to be working out, and this might just be one way to stop the bleeding by combining and reducing overheads in both companies.

Not a bad strategy to buy when SolarCity has lost nearly 66% of its value in the last year.

If you've been waiting to buy Tesla shares, now's the time, it dropped 12% overnight.

The trouble is, before today if you wanted Tesla you could buy just Tesla. That was obviously very appealing to a lot of people.

Now you gotta buy the combined company: Tesla with just a little bit of SolarCity attached, too.

 

[therealist]

As much as I love Elon, SolarCity doesn't seem to be working out, and this might just be one way to stop the bleeding by combining and reducing overheads in both companies.

Not a bad strategy to buy when SolarCity has lost nearly 66% of its value in the last year.

If you've been waiting to buy Tesla shares, now's the time, it dropped 12% overnight.

Doubtful, market sentiment on the SolarCity deal will drive TSLA down. TSLA can't make money and it's acquiring another big company that can't make money. Both companies are also highly-levered. With this deal, everything falls on the Model 3, it's Tesla's only hope. They have to knock it out of the park or else bankruptcy is a serious possibility. Their debt level will be insurmountable if the Model 3 is a dud.

If you believe in the legend of Elon Musk the best time to get TSLA stock would be next year. There is no catalyst up until the Model 3 launch that could conceivably increase Tesla's stock price. If anything the price will go down.

 

[ExVicis]

yes. in fact a lot of companies use the "install our employees on another company's board" strategy for buyouts/takeovers. He just happens to already be in-place on both.

I suppose that makes sense, I guess it's that leadership being all already in the other company part that throws me off.

 

[Log4Girlz]

Bad news for Tesla, Solar City is a weak company.

Great news for Solar City, Solar City is a weak company.

Tesla Musk be crazy

 

[El Topo]

I mean, there's some synergy there with their (apparently pretty decent) home battery, no?

 

[gatti-man]

As much as I love Elon, SolarCity doesn't seem to be working out, and this might just be one way to stop the bleeding by combining and reducing overheads in both companies.

Not a bad strategy to buy when SolarCity has lost nearly 66% of its value in the last year.

If you've been waiting to buy Tesla shares, now's the time, it dropped 12% overnight.

No it's not. Tesla is still insanely over priced. Needs to drop another 40% before its buy time.

 

[sfedai0]

Musk is a good salesman but this purchase is a blatant move to save Solarcity, which is something Tesla can ill afford. Both companies are highly leveraged and comes at a time when Tesla needs to fully invest itself in pushing out their cars, not diversifying their product portfolio.

 

[Zaptruder]

It's probably a move to save Solarcity. But there's some long term synergy to be had in turning Tesla into an energy company. I mean, that's what their batteries were already doing anyway.

 

[PrivateWHudson]

Isn't SolarCity the company that leases residential solar? I've been looking recently and every article says that leasing is the worst way to go solar providing almost no savings since the tax rebates go back to the leasing company and it's hard to sell the house since the lease would need to be transferred as well.

 

[RumblingRosco]

As much as I love Elon, SolarCity doesn't seem to be working out, and this might just be one way to stop the bleeding by combining and reducing overheads in both companies.

Not a bad strategy to buy when SolarCity has lost nearly 66% of its value in the last year.

If you've been waiting to buy Tesla shares, now's the time, it dropped 12% overnight.

I feel like advice such as the bolded should include a disclaimer stating the poster's current stake in either company.

 

[Unknown Soldier]

The shareholders better vote in unison to reject this deal because it's shit and Elon should be ashamed he's trying to prop up a family member's failed company with investors' money.