Tesla Motors Inc (NASDAQ:TSLA) is looking to advance their business and they have now bid for the solar energy company, SolarCity. Tesla bid $2.8 billion for the company and it is believed SolarCity is now considering the bid.
SolarCity is a San Mateo, a California-based company that provides residents in the area with solar panels and alternative energy solutions. The company formed a special committee to look into the bid. The committee, which is made up of two members of the company’s board will look into the bid that was submitted by Tesla last week.
The two board directors which are on the committee are Donald Kendall and Nancy Pfund and it is going to be chaired by Kendall. In a statement to reporters, the company said that the Board had allowed for a special committee to be formed and it would have the exclusive authority to determine the long-term future of SolarCity and the long term business plan and any stand-alone business opportunities for the value creation of the company.
The news was well received by investors as shares for the solar company rose by more than 5% to $23.82 on Tuesday, and Tesla’s shares also managed to rise to $201.39 up by 1.4 percent.
S&P Global Market Intelligence said the owner of the largest shares in SolarCity is Elon Musk, holding at least 22.5 percent of the company. Musk said that the timing of the bid from Tesla was based on their need for the product that SolarCity had and their need to provide their customers and clients with solutions. S&P Global Market Intelligence puts Musk’s shares at 22.16 million.
Tesla bid to buy SolarCity at $26.50 to $28.50 a share to the SolarCity shareholders. The sale will be pushed by the issuance of Tesla stock and the electric car maker’s shares present a premium of 21 percent to 30 percent if the shares are calculated with those ending June 21 and also including the five-day average Tesla shares. How Elon Musk’s shares would be affected in the deal is yet to be seen.
At the going rate of the bid, the proposed exchange ratio would be 0.123 to 0.131 shares of the Tesla common stock per every share they get from SolarCity common stock.
The bid clearly signifies the ambitions of Tesla and its CEO and founder Elon Musk. Whether all his ambitions and dreams will be fulfilled is yet to be seen, but at this moment it surely doesn’t hurt to try.
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