SolarCity accepts Tesla’s $2.6 billion offer; both shares fall | Reuters

Last month I blogged about Elon Musk selling 2.8 million of his own shares of Tesla stock in an offering. That offering came after an undisclosed death involving a Tesla car in autopilot mode.

Today, we see that Tesla is acquiring Solar City, a company with Elon Musk as the chairman of the board and his cousin Lyndon Rive as the CEO. Musk is also the largest shareholder in both companies. Highlights from the Reuters article:

  • "if the deal is consummated, the combined Tesla-SolarCity could require a ‘small equity capital raise’ next year.”
  • “Both companies have been burning through cash” My question: Whose cash? Cash from investors who purchase additional TSLA shares during these “small equity capital” raises.
  • “When two highly leveraged companies that have to raise huge amounts of capital merge, you don’t get a stronger company. You get a larger company that combines the weaknesses of both smaller companies” -Erik Gordon, professor, University of Michigan Ross School of business
  • Of course, an entity that owns 22,100 shares says “If some people see things three steps ahead, Elon Musk is 10 steps ahead.” Who would talk bad about decisions in a company when you still own 22,100 shares (about $5 million dollars)?

The game of hot potato continues…

http://www.reuters.com/article/us-solarcity-m-a-tesla-idUSKCN10C26O

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