Tesla Offers $2.6 Billion for SolarCity

Home solar panel maker SolarCity Corp. has agreed to be acquired by Tesla Motors Inc. in an all-stock deal worth about $2.6 billion.

Tesla is paying 0.11 share per SolarCity share. The deal values SolarCity’s stock at $25.37, which is below the original offer range of $26.50-$28.50. 

SolarCity has 45 days to find a better offer, and Tesla has the option of submitting a richer second bid. The companies hope to finalize the deal by the end of this year. CEO Elon Musk figures combining the companies will reduce their costs by $150 million next year.

Musk owns 26% of Tesla and 22.5% of SolarCity. He insists that merging the two companies will create a full-service entity that can supply customers with electric cars and the solar panels and storage batteries to power them.

Skeptics question the deal, pointing out that Tesla and SolarCity lost $1.2 billion and $1.1 billion, respectively, over the past two years. The Associated Press cites an analysts’ survey predicting the two companies will lose a combined $1.3 billion this year.