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  • December 2017 (Revised November 2018)
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Tesla: Merging with SolarCity

By: Stuart C. Gilson and Sarah L. Abbott
  • Format:Print
  • | Language:English
  • | Pages:28
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Abstract

In 2016, electric car manufacturer Tesla announced that it was making an offer to acquire solar panel manufacturer SolarCity in an all-stock offer worth $2.6 billion in Tesla stock. Tesla’s co-founder and CEO, Elon Musk, believed that the merger would generate significant cost and revenue synergies, based on his vision of the future of transportation, energy storage, and a “green” economy. However, most Wall Street analysts were highly skeptical of the deal, voicing concerns that the merger would burden Tesla with excessive debt and that Musk was using the deal to advance his personal interests (at the expense of public shareholders) and bail out Tesla. Concerns were raised over possible conflicts of interest, given that Musk owned over 20% of the stock, and sat on the board of directors of both companies. The viability of the merger was also questioned given that neither Tesla nor SolarCity had ever been profitable.

Keywords

M&A; M&A Valuation; Investing; Equities; Equity; Valuation; Mergers and Acquisitions; Auto Industry; Energy Industry; United States

Citation

Gilson, Stuart C., and Sarah L. Abbott. "Tesla: Merging with SolarCity." Harvard Business School Case 218-038, December 2017. (Revised November 2018.)
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About The Author

Stuart C. Gilson

Finance
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Related Work

    • December 2017 (Revised November 2018)
    • Faculty Research

    Tesla: Merging with SolarCity

    By: Stuart C. Gilson and Sarah L. Abbott
Related Work
  • Tesla: Merging with SolarCity By: Stuart C. Gilson and Sarah L. Abbott
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