“Jim Bob” Musk

22 June 2016 By Richard Beales Follow @richardbeales1

The entrepreneur may see possibilities from uniting Tesla and SolarCity that others are missing. They seem, though, to share little beyond big ambitions, cash outflows and stakes owned by Elon Musk. Easier to spot are similarities to a dreadful mining and oil merger from 2012.

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Tesla Motors on June 21 offered to buy SolarCity for up to $2.8 billion in stock, in a deal that would unite two publicly traded companies backed by Elon Musk. Under the terms of the bid, Tesla would exchange about 0.122 to 0.131 of its own shares for each SolarCity share, or from $26.50 to $28.50 a share using Tesla’s five-day average stock price.

Tesla said the deal would create “the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers.”

Musk is the biggest shareholder in both companies with about a 19.5 percent stake in Tesla and 22.2 percent of SolarCity, according to Thomson Reuters data.

Tesla said that it is prepared to make any merger subject to the approval of a majority of disinterested stockholders of both SolarCity and Tesla. It said Musk and Antonio Gracias, who are directors of both companies, had recused themselves from voting on the proposal at the Tesla board meeting at which it was approved, and would do the same at SolarCity as well.

SolarCity said it would “carefully evaluate” the proposal.

At 1 p.m. EDT on June 22, Tesla’s stock was down nearly 9 percent at $200.70 while SolarCity’s was up more than 5 percent at $22.35.

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