Elon musk wants tesla motors inc to grab solarcity corp; should investors eye synergies or compounded losses_
On Tuesday, Tesla CEO Elon Musk proposed the idea of Tesla Motors Inc. Noodles and company menu and prices ( NASDAQ:TSLA) acquiring the solar installation company SolarCity in an all-stock deal, valued at $2.8 billion. House of noodles menu Following the news, Tesla stock plummeted more than 12% to $192.75, while SolarCity shares surged as much as 15% reaching at $24.31 during after-hours trade.
At present, Mr. Noodles and company naperville Musk holds several positions. Noodles and company okemos He is the chairman of SolarCity, CEO of Tesla, and largest stakeholder of the two companies. Noodles and company bozeman He has described the deal as a “no brainer” during his call with reporters. Noodles and company niles According to Mr. Noodles and companu Musk, the offer was made so that the company could sell an electric car, a home battery, and a solar system to his customers all at once.
Mr. Noodles and company frederick Musk said to the reporters: “It improves the efficiency of the setup, focusing on lowering both cost of sales and cost of implementation. Working at noodles and company Instead of having, say, three different trips to a house to put in a car charger and solar power and a battery pack, you can actually integrate that into a single business.”
In a letter sent to SolarCity Chief executive Lyndon Rive, who is also Mr. Noodles and company woodbury Musk’s cousin, the US electric vehicle maker made an offer within the range $26.50-28.50 per share, which reflects the premium of 21% to 30% for SolarCity’s Tuesday closing stock price of $21.19.
In the call with reporters, Mr. Noodles and company headquarters Musk said: “This is something that we have been thinking about and debated for many years, but the timing seemed to be right now.” One reason could be linked to Tesla’s aggressive production ramp of lithium-ion batteries that could be used in conjunction with solar panels – SolarCity’s core business. Noodles and company hudson wi In the same call, Mr. Noodles and company new berlin Rive said that he is very excited regarding this potential merger, which still needs approval from SolarCity shareholders.
According to Tesla, the deal still requires approval from “a majority of disinterested stockholders” of the two parties. Noodles andcompany This merged company will have more than 30,000 employees with all product offerings under renamed Tesla that will provide electric cars along with battery packs and solar panels. Noodles and company menu prices With the combination of these products, customers will be able to deploy and consume energy in the most efficient way possible, maintaining the lowest cost.
As per sources, the two CEOs have taken the idea of this merger during their trip to the Burning Man desert festival in 2004. Noodles nd company After years of deliberation, the idea is finally taking effect. Noodles and company to go This might be because in these years, SolarCity has become the top US residential solar installer, mainly because of the no-money-down financing scheme, which has allowed households to pay a lower monthly fee for their solar panels.
However, this would not be easy for the automaker. What is noodles In fact, it may only increase complexities for Tesla as it plans to add an unprofitable operation to its Tesla businesses that are already stressed financially. Noodles locations Tesla, which has the market capitalization of $32.7 billion, is much larger than SolarCity, which has the market capitalization of $2.1 billion.
Tesla is still suffering losses since it became public in 2010 and has cash issues. Noodles and company draper At the end of the first quarter, Tesla had $1.44 billion in cash and equivalents, which is more than $1.2 billion the company had at the start of this year. Noodles etc chicago The graph below shows Tesla’s cash and equivalents by as of first quarter 2016.
The graph above depicts that with time Tesla’s cash position is deteriorating. Noodles and company louisville This is a great concern for the company as it does not only require cash for the development of its Model 3, but also to build its $5 billion gigafactory and to handle its components shortages and quality issues associated with its older models. Noodles and things Despite the fact that Tesla cut its capital spending to nearly half, it had negative free cash flow of $466 million and the operating loss of $248 million. Noodles history Moreover, it is expected that the company won’t be profitable until 2020 at the earliest. Noodles fast food Tesla has recently launched share sale to raise $1.7 billion for capital expenses, which includes ramping up the production of its latest unveiled Model X.
On the other side, SolarCity has the liabilities of nearly $6.24 billion, including debt. Noodles and company texas Although it is a market leader in the US residential rooftop solar systems, it often reports quarterly losses. Noodles and company take out In the latest quarterly results, the company posted a loss of $283 million. Noodles and company franchise This is because in recent times, SolarCity has witnessed increasing costs and growing competition, as more startup firms has started to offer homeowners low-cost loans to kit out their roofs .
Year-to-date, its stock price has dropped approximately 60% as investors sees its business model too complex in this competitive market. Noodles corporate Tesla aims to safeguard the company from its financial struggles and to try to make the company profitable.
However, as per Mr. Noodles and comoany Musk, Tesla did not know the number of its customers that have solar panels, but it assumes that most of them will be interested in solar. Noodles and company joliet In a recent blog on its websites, the automaker described that this deal with Solar City is a way to expand markets of the two companies.
The blog says: “We would be able to maximize and build on the core competencies of each company. Noodles atlanta menu Tesla’s experience in design, engineering, and manufacturing should help continue to advance solar panel technology, including by making solar panels add to the look of your home. Wok n noodles menu Similarly, SolarCity’s wide network of sales and distribution channels and expertise in offering customer-friendly financing products would significantly benefit Tesla and its customers.”
Mr. Noodles and company 80112 Musk, who has 19% ownership of Tesla and 22% of SolarCity, said that he will excuse himself from voting on the deal and the decision will be taken by the shareholders.