Tesla and SolarCity have confirmed a $2.6 billion all-stock deal that will see the electric automaker and solar panel manufacturer merge. The merger, which Tesla CEO Elon Musk recently called a "no-brainer," had left many investors and analysts feeling a little less sure.
Just the same, a joint release issued by Tesla and SolarCity indicates the two combined entities expect $150 million of cost "synergies" in the first year of joint operation alone. The combined companies will, the release states, "create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed."
While Tesla is best known for its, and high-performance electric cars, the company also produces a series of residential and industrial power storage devices called PowerWall, currently assembled at its new facility. SolarCity provides photovoltaic solar systems for both homes and businesses. The merger of the two companies, both founded by Musk, will allow an "esthetically beautiful and simple one-stop solar-plus-storage experience."
When Musk originally announced the intention of a merger in June, the reaction was largely negative. Tesla stock dropped by more than 10 percent in the following days. As of Friday, however, Tesla's shares were up by approximately 7 percent since the original announcement of the deal. SolarCity shareholders will receive 0.110 Tesla shares per share, representing a $25.37 valuation per-share of SolarCity.
This isn't a done deal, as shareholders will need to approve the details -- and there's the minor detail of regulatory approval as well. The intention is to finalize the deal sometime in the fourth quarter of the year.