PALO ALTO, Calif., June 22 (UPI) -- Electric car manufacturer Tesla Motors Inc. offered to buy SolarCity in an effort to financially prop up the embattled solar panel maker.
The proposed deal, announced Tuesday, values SolarCity at up to $2.8 billion, and would be an all-stock transaction. Entrepreneur Elon Musk is the chairman and major shareholder of both companies, and the aim, he says, is to create a leading company in the renewable energy industry.
"We would be the world's only vertically integrated energy company offering end-to-end clean energy products to our customers. This would start with the car that you drive and the energy that you use to charge it ... we would be able to maximize and build on the core competencies of each company," a Tesla statement about the proposal said Tuesday.
Both publicly traded companies have grown quickly and have used billions in cash. Musk, a billionaire, has taken out loans to buy stock in both companies.
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SolarCity has $2.6 billion in long-term debt and growing losses. Adding an unprofitable company to Tesla, despite Musk's suggestion that a solar panel maker and a company making battery-driven cars is a perfect fit, could further strain Tesla's finances, The Wall Street Journal said Wednesday.
Tesla is completing construction of a $5 billion "Gigafactory" to build batteries near Reno, Nev., and some analysts believe Tesla's future lies in batteries and not cars, The New York Times reported.
After the announcement of the proposed merger, SolarCity stock rose 19 percent, to $25.26, in after-hours trading. Tesla shares fell over 13 percent to $190.59.
