Elon Musk's Company Wants to Buy a Company Founded and Chaired by Elon Musk

Founded with the intent of finding energy solutions (and profit) in the power of the sun, SolarCity’s photovoltaic energy business has grown in leaps and bounds since 2006. Now, as the company poises itself for bigger profits, a very familiar man wants to acquire the operation.

Tesla Motors published a note on its website yesterday stating its intention to acquire SolarCity. The offer, made by Tesla, would see the electric automaker trade shares with the San Mateo, California-based company, bringing the business into its fold.

Tesla founder and CEO Elon Musk is no stranger to SolarCity’s operation — he co-founded it with cousins Lyndon and Peter Rive (CEO and CTO of Solar City), and serves as the company’s chairman.

In a letter to Lyndon Rive, published on Tesla’s website, the automaker’s board of directors offered “a proposal to acquire all of the outstanding shares of common stock of SolarCity in exchange for Tesla common shares … This proposal represents a value of $26.50 to $28.50 per share, or a premium of approximately 21% to 30% over the closing price of SolarCity’s shares, based on today’s closing price of SolarCity’s shares and the 5-day volume weighted average price of Tesla shares.”

Tesla noted that both companies target similar buyers, but with different products. Aligning the two would allow them to share technology and expertise.

“We would be the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers,” Tesla stated. “This would start with the car that you drive and the energy that you use to charge it, and would extend to how everything else in your home or business is powered.”

SolarCity hasn’t issued a decision yet, but its stock price rose 20 percent after news of the offer broke, sinking back to a 15-percent lift later in the day. Tesla’s stock went in the opposite direction, sinking as much as 11 percent.

As MarketWatch points out, Musk owns a 22.2 percent stake in SolarCity and a 21.3 percent stake in Tesla. In a conference call yesterday, Musk said he recused himself from board discussions on the deal to prevent a conflict of interest.

After Recode published a story saying Musk and his family stand to make $700 million through the acquisition, Musk fired back via Twitter.

“No one is ‘taking home’ anything,” said Musk. “In a stock for stock transaction, nothing comes off the table.”

The lion’s share of SolarCity’s profit comes from rooftop solar installations. Last year, the company changed its strategy, focusing on profit instead of growth. The previous five years saw SolarCity acquiring new holdings to expand its portfolio, but the company’s focus now is opening its massive solar panel factory in Buffalo, New York.

After a delay, and a huge investment from the state of New York, the factory is scheduled to open in mid-2017.