Tesla, which made an offer to acquire SolarCity in June, is going ahead with the deal.
Tesla says it will buy the solar company — 22.54 percent of which is owned by Tesla CEO Elon Musk — in an all-stock transaction valued at $2.6 billion.
“We expect to achieve cost synergies of $150 million in the first full year after closing,” Tesla wrote in a blogpost. “We also expect to save customers money by lowering hardware costs, reducing installation costs, improving our manufacturing efficiency and reducing our customer acquisition costs. We will also be able to leverage Tesla’s 190-store retail network and international presence to extend our combined reach.”
The merger is a fundamental aspect of the second edition of Musk’s “master plan.” As part of his plan, Musk wrote that Tesla would be developing a solar roof that also has a battery product for his vehicles.
“We can't do this well if Tesla and SolarCity are different companies, which is why we need to combine and break down the barriers inherent to being separate companies,” Musk wrote. “That they are separate at all, despite similar origins and pursuit of the same overarching goal of sustainable energy, is largely an accident of history.”
As part of the agreement, SolarCity has 45 days to solicit alternative proposals. The acquisition of SolarCity was agreed upon after a special committee the two companies formed, which consisted of SolarCity board members Donald Kendall and Nancy Pfund, made outbound inquiries to other potential acquirers and partners.
The special committee acted in place of SolarCity’s board because several of the board members — including Musk — recused themselves from the decision as many of them were on Tesla’s board or were related to someone who is.
This is developing.
This article originally appeared on Recode.net.