Shares of Tesla Motors rose 0.33 percent to $223 in pre-market trading yesterday as the automaker and SolarCity are close to a merger deal.
Tesla and SolarCity announced the proposed merger agreement over a month ago. Since then, both parties have been showing perseverance on the agreement. The two companies are in the concluding stages of accomplishing due diligence on each other and could decide on the terms of a deal in the coming days. However, it is possible that the negotiations could fail.
The deal will meld the leading electric car manufacturer and the solar installer, making the world’s only vertically mixed energy company.
According to sources, it is uncertain whether SolarCity would be able to add a go-shop period, a provision that enables a target company to seek out better offers for shareholders. The go-shop period would allow the solar installer to ask for bids from other potential buyers within one to two months.
Market analysts believe that with Tesla’s exceptional plans with SolarCity and readiness to consume its losses, the provision shouldn’t be an obstacle.
Elon Musk, Chairman and CEO of Tesla and Chairman of SolarCity, disclosed the all-stock offer amounting to $2.8 billion. The merger is intended to establish a one-stop shop for customers interested in purchasing solar inverters, residential storage batteries, and electric vehicles. Moreover, the deal is assumed to cut distribution costs.
Musk, who is the largest shareholder of both companies, as well as other executives that serve Tesla and SolarCity, were excused from the merger vote out. SolarCity created a special committee of two board members to analyze Tesla’s offer.
Last week, Musk noted that he expects the shareholders of both companies to approve the deal with an overwhelming majority. The statement was released after speaking with major shareholders.
He recently published Tesla’s “Master Plan, Part Deux” and the initial stage of the plan was “Create stunning solar roofs with seamlessly integrated battery storage.” Musk explained that the target cannot be achieved if Tesla and SolarCity are two separate entities.
"What really matters to accelerate a sustainable future is being able to scale up production volume as quickly as possible," Musk wrote. "That is why Tesla engineering has transitioned to focus heavily on designing the machine that makes the machine — turning the factory itself into a product."
Tesla to Aims to Finish its Gigafactory Faster
Tesla has increased the labor force working on its $5 billion high-tech facility in the Nevada desert, targeting to finish construction on a much tighter schedule.
The automaker wants to have the factory ready for the release of its Model 3, a $35,000 car designed to be a more affordable version of its high-end electric sedans and sports car.
Approximately 1,000 workers are sustaining construction for 7 days a week to meet Tesla’s new arrangement to produce lithium-ion battery cells by early next year.
The company has been building the factory in stages, and it will be prepared to manufacture batteries before vehicles. The plan is already producing battery packs, however, Tesla has to purchase the actual lithium-ion cells from Panasonic.
Tesla has encountered issues in meeting consumer demand and lost two manufacturing executives in 2016.
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