Tesla clears antitrust hurdle in bid to buy SolarCity
by Cleantech Canada Staff
Proposed deal inches toward shareholder vote as conflicts of interest, merger of two money-losing companies weigh on investors
The electric vehicle maker is hoping to create a one-stop-shop for clean energy and transportation. PHOTO: Tesla
PALO ALTO, Calif.—Shortly after powering up its Model S with a larger battery—an upgrade that turned the electric sedan into the fastest car currently in production—Tesla Motors Inc. was given the regulatory green light to speed forward with its planned acquisition of rooftop solar company SolarCity Corp.
The Federal Trade Commission granted the proposed deal antitrust approval last week, removing one of the hurdles the electric vehicle maker needed to clear before bringing the deal to its shareholders.
Tesla announced the US$2.6 billion all-stock bid for SolarCity earlier this month, claiming the agreement would create a one-stop-shop for clean energy and transportation. If CEO Elon Musk can convince shareholders of the deal’s worth, the acquisition is expected to go through in the fourth quarter of this year.
Despite the aura surrounding Musk, who has a 26 per cent stake in Tesla and a 22.5 per cent interest in SolarCity, investors have been skeptical about the deal from the outset. Tesla shares slid significantly when the merger was first proposed in June and they have tumbled about 10 per cent since the beginning of August when it was made official.
Conflicts of interest, the combination of two money-losing companies and the relatively disparate markets the companies operate in are among the leading concerns.
Tesla’s next step in the acquisition process will be to file for approval with the U.S. Securities and Exchange Commission. After skipping over that obstacle, the company will need to hold a shareholder vote to finalize the takeover.
