In August, board members approved Tesla's bid to acquire SolarCity in an all-stock transition worth $2.6 billion. Today, Tesla’s shareholders “overwhelmingly approved” the acquisition of SolarCity.
According to a just-released blog post “Excluding the votes of Elon and other affiliated shareholders, more than 85 percent of shares voted were cast in favor of the acquisition. With SolarCity’s shareholders also having approved the acquisition, the transaction will be completed in the coming days.”
Calling it a “conservative figure,” Tesla aims to realize cost efficiencies of $150 million in the first year after closing the deal. Those savings will be driven by sales and marketing efficiencies, overhead savings and manufacturing efficiencies, according to the firm
SolarCity recently announced its Q3 financials — trouncing consensus by $30 million on revenue of $200.5 million with higher-than-expected installations. Despite the revenue beat, the company just narrowly beat on EPS. SolarCity's leadership expects 2016 installations to be at 900 megawatts, the lower end of the previously guided range. It's the third installation guidance warning from SolarCity in 2016.
It remains to be seen whether this is a distraction for Tesla or a bailout for SolarCity.
As GTM's Katie Tweed reported, Musk says its the next logical step in his master plan. “The whole point of the merger is to get rid of the conflicts of interest,” said Musk, suggesting that a single company is essential to moving his vision forward. Many investors and analysts have questioned what value SolarCity brings to Tesla, especially in the near term. But for some investors, increased diversification and lowered costs for an integrated company offer value in the long term.
“Despite much near-term focus on SCTY, autopilot, deliveries and demand, we find conversations with investors more focused on longer-term earnings potential,” wrote Baird Equity Research in a briefing.
Here is some our recent coverage of the two companies and the deal.
Listen to a recent conversation on the Energy Gang podcast about the merger: