Tesla offers $2.8 billion for SolarCity..”shameful” says Chanos
Elon Musk on Tuesday sought to build a clean energy powerhouse as his electric car maker, Tesla Motors Inc (TSLA.O), made an offer to buy his solar installation firm SolarCity Corp (SCTY.O) in a stock deal worth as much as $2.8 billion.
Tesla shares plunged more than 13 percent to $189.99 in extended trading – amounting to a loss in value of about $4.3 billion, or more than the value of the offer for the other company. Shares of SolarCity rose about 18 percent to $25.02.
Musk, who is the chairman of SolarCity, CEO of Tesla and the largest shareholder of both companies, described the deal as a “no brainer” in a call with reporters. The company could sell customers an electric car, a home battery and a solar system all at once, he said.
“Instead of making three trips to a house to put in a car charger and solar panels and battery pack, you can integrate that into a single visit,” Musk told reporters. “It’s an obvious thing to do.”
Tesla investors punished the company’s shares, however.
“Ideally you want to see Tesla focus on Tesla – building Teslas and expanding the cars,” said Ivan Feinseth, an analyst at Tigress Financial Partners. “Maybe the feeling is that this takes away focus, and it could financially strain Tesla, which is going to continually need a lot of cash.”
SolarCity has about $6.24 billion in liabilities, including debt.
Tesla executives said its predictable cash flow in the form of payments for its solar systems pays for the debt.
Although it is the U.S. market leader in residential rooftop solar systems, it regularly posts quarterly losses and the stock has fallen nearly 60 percent so far this year, pummeled by investors who see its business model as too complex in a market that has become increasingly competitive.
Musk said Tesla did not know how many of its customers have solar panels, but guessed that most of them were likely interested in solar. In a blog, Tesla described the deal as a way to expand both companies’ markets.
Tesla’s bid to buy struggling solar energy firm SolarCity has been called “shameful” by financier Jim Chanos.
Mr Chanos, who is betting against the shares of both firms, described the bid as a “shameful example of corporate governance at its worst”.
Tesla made a $2.8bn (1.9bn) offer for SolarCity on Tuesday.
Tesla’s chief executive Elon Musk said the deal, which will be paid for in Telsa shares, was a “no brainer”.
The two firms have close ties.
Mr Musk owns 22% of SolarCity and sits on the company’s board. SolarCity’s chief executive Lyndon Rive and Mr Musk are cousins.
“As a combined automotive and power storage and power generation company, the potential is there for Tesla to be a trillion-dollar market cap company,” Mr Musk said.
“Tesla Motors Inc, made an offer to buy his solar installation firm SolarCity Corp in a stock deal worth as much as $2.8 billion.”
hes behind both..wax on wax off..
“Mr Chanos, who is betting against the shares of both firms, described the bid as a “shameful example of corporate governance at its worst”.”
hes right but i have no time for chanos either..