FTC Approves SolarCity Acquisition By Tesla
The Federal Trade Commission (FTC) has approved the SolarCity acquisition by Tesla Motors (here is official notification).
The approval happened quicker that expected, considering the number of overlaps between the two companies (such Elon Musk himself serving as CEO of Tesla and Chairman of SolarCity at the same time), as the $2.6 billion deal was just finalized four weeks ago.
The merger is billed as a solution to achieve synergy between a solar energy (SolarCity) company and a energy storage systems provider (Tesla Motors).
At the time of the announcement Tesla put it this way:
“As one company, Tesla (storage) and SolarCity (solar) can create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed.”
Tesla also has explain future synergies as follows:
“By joining forces, we can operate more efficiently and fully integrate our products, while providing customers with an aesthetically beautiful and simple one-stop solar + storage experience: one installation, one service contract, one phone app.”
According to news reports SolarCity will benefit from the merger, as it finds itself in tightening solar competition, and a prior business model that has become obsolete in some states.:
“SolarCity has come under pressure from rivals offering low-cost solar energy through large, utility-scale installations, and because some state governments have reined in subsidies that encouraged rooftop solar.”
The question to investors, at least of the Tesla variety, is whether or not the added obvious benefit to SolarCity will conversely be a drag on Tesla’s future outlook, which have seen huge advancements and had a higher potential ceiling.
There is still few weeks needed for signing the final agreement.