Tesla Motors bid $2.8 billion to buy SolarCity, the solar energy company.
The San Mateo, a Calif-based provider of solar panels and energy solutions has formed a special committee made up of two members, directors Donald Kendall and Nancy Pfund to evaluate the bid submitted by Tesla last week.
The company said in a statement issued on Monday, “The 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.
Tesla CEO Elon Musk said a combination of both the companies make sense because it would combine SolarCity’s expertise in solar panels to Tesla’s emerging power storage business. Tesla could then act as the one-stop shop for solar power and a battery storage system to store solar power for use during nighttime.
Musk, who is also the chairman of SolarCity said, “The timing is driven by the product and providing compelling solutions to customers.” Musk holds 22.16 million shares (equivalent to 22.5% of the company), as of June 20 which makes Musk the largest shareholder of SolarCity. The calculation is according to S&P Global Market Intelligence.
Tesla has offered a share of $26.50 to $ 28.50 to SolarCity shareholders over the issuance of Tesla stock, which the company says would signify a premium of 21% to 30% to SolarCity’s closing price as on June 21 and biased the five-day average Tesla shares. The anticipated exchange proportion is 0.122 to 0.131 shares of Tesla common stock for every share of SolarCity common stock.