Just over a week ago, Elon-owned Tesla Motors offered to acquire Musk-owned SolarCity. The acquisition was, reportedly going to be in the form of SolarCity stock exchanged for Tesla stock. With regard to this, America’s number 1 solar power provider today announced that its Board of Directors has formed a special committee of independent directors to evaluate the June 20, 2016, proposal from Tesla.
Elon Musk and Antonio Gracias, who are on the boards of both the companies, will abstain from the voting process. This stands to show that the deal might just take place. The exchange would be beneficial for both companies. Tesla would pay a premium of 21 percent to 30 percent on top of its current market value of $2.14 billion.
Tesla had announced the acquisition offer through a blog post on the company website.
The SolarCity team has built its company into the clear solar industry leader in the residential, commercial and industrial markets, with significant scale and growing customer penetration. They have made it easy for customers to switch to clean energy while still providing the best customer experience. So, we’re excited to announce that Tesla today has made an offer to acquire SolarCity.
With that at the apex, SolarCity’s Board has granted the special committee the exclusive authority to evaluate SolarCity’s long-term business plan and stand-alone opportunities for value creation against a broad range of strategic alternatives.
The committee comprises of two of SolarCity’s eight board directors Donald R. Kendall, Jr. and Nancy E. Pfund. Kendall will serve as chair of the special committee, who was once on the board of Tesla. Its legal counsel are Skadden, Arps, Slate, Meagher & Flom LLP. Lazard will serve as its financial advisor to assist in its review.
The deal is highly complicated because Tesla chief executive Elon Musk is also chairman of SolarCity and owns slightly more than 20 per cent of both companies. This prompts questions about potential conflicts. Not just this, only one of SolarCity’s eight-person board has no present or past connection to Tesla.
The company has no intention of releasing any statements unless any big developments take place or it is completely necessary.