tesla reaches 26bn deal to buy solarcity
Last Updated : GMT 06:49:16
Arab Today, arab today
Arab Today, arab today
Last Updated : GMT 06:49:16
Arab Today, arab today

To acquire the solar power company

Tesla reaches $2.6bn deal to buy SolarCity

Arab Today, arab today

Arab Today, arab today Tesla reaches $2.6bn deal to buy SolarCity

A Tesla Model S car on display in Shanghai
New York - Arab Today

Electric carmaker Tesla said Monday it won agreement from SolarCity to acquire the solar power company for $2.6 billion, confirming a deal that has been criticized on Wall Street.

Tesla announced the bid in late June, but it drew jeers on Wall Street, in part because of skepticism over the motives of Tesla chief executive Elon Musk, who is also chairman of SolarCity as well as its biggest shareholder.

Some analysts also questioned whether the deal -- which still requires shareholder approval from both companies -- would divert Tesla's attention from an ambitious plan to significantly expand electric-car production in the next few years.

But Tesla argued the combination would meet the needs of a growing portion of consumers who are environmentally focused and will be drawn to the opportunity buy their car from the same company that would install a solar-powered fueling station at their homes.

Tesla said that the buyout would also enable it to achieve lower hardware and marketing costs and boost manufacturing efficiency, creating the "world's only vertically integrated sustainable energy company," it said in a statement.

"There is natural parts integration here where there isn't for gasoline and cars," said Musk. "You don't want the gas station at your house."

The all-stock transaction values SolarCity at $25.37 a share, below the original range discussed in June of between $26.50 and $28.50 a share.

The agreement allows SolarCity to solicit alternative proposals for 45 days.

The boards of directors of each company have signed off on the deal. However, the agreed acquisition requires approval from a majority of shareholders of both companies.

Musk, who holds 21.1 percent of Tesla and 22.5 percent of SolarCity, will not be able to vote as a shareholder on the deal.

- Searching for profitability -

Musk has announced an ambitious goal of producing 500,000 electric cars a year by 2018, which would take it from being a niche producer of luxury sedans to a mainstream competitor in the auto industry. Skeptics have questioned those targets.

Tesla reported a loss of $282.3 million in the first quarter and has had annual losses the last five years. SolarCity lost $21.5 million in the first quarter and also has a record of annual losses.

"It's combining two companies that are cash-flow negative," said Efraim Levy, analyst at S&P Global Market Intelligence. "That creates the potential for dilutive capital raises."

While there is some strategic logic over the long-term, the deal likely dims the chances of Tesla turning a profit in the near term, he said.

"If you're buying (Tesla) on the anticipation of it becoming profitable, or big-time profitable, in the next few years, this is going to set back your plan, if they ever become profitable," Levy said.

But Trip Chowdhry, analyst at Global Equities Research, said Tesla's vision is to "create a whole new industry" akin to Amazon, which lost money for years. Profitability is not the most important factor in evaluating Tesla, he said.

"When you create an industry, you only win because of speed," Chowdhry said.

SolarCity shares tumbled 7.4 percent to $24.72, while Tesla lost 2.0 percent at $230.01

Source: AFP

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

tesla reaches 26bn deal to buy solarcity tesla reaches 26bn deal to buy solarcity

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

tesla reaches 26bn deal to buy solarcity tesla reaches 26bn deal to buy solarcity

 



GMT 10:10 2017 Thursday ,09 February

3 Important Elements You Have to Consider

GMT 04:03 2017 Monday ,24 April

Bella Hadid ‘dying’ to visit Palestine

GMT 19:25 2016 Wednesday ,25 May

The Brooklyn Desk by Oeuf NYC

GMT 07:49 2018 Friday ,05 January

2 Russian servicemen killed

GMT 07:58 2018 Monday ,01 January

Italy orders N. Korea's envoy to leave

GMT 08:45 2017 Wednesday ,20 December

US military imagines war without GPS

GMT 17:26 2017 Sunday ,17 December

Putin thanks Trump for help in foiling attack plot

GMT 22:19 2017 Monday ,16 October

Cairo-hosted Fatwa conf. new contribution

GMT 02:27 2016 Friday ,10 June

Video hints Japan abetting illegal ivory trade

GMT 07:04 2017 Wednesday ,19 April

1,883 Bahrainis found jobs in March

GMT 14:24 2016 Tuesday ,22 November

Citi and JPMorgan top list of ‘globally banks’
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday