Tesla Motors Inc. said on Monday it had reached a deal with SolarCity Corp. to buy the solar panel installer for $2.6 billion, a big step in Chief Executive Elon Musk's plan to offer consumers a one-stop clean-energy shop.
The combined entity would sell solar panels, home battery storage systems and electric cars under a single brand.
"Solar and storage are at their best when they're combined," the companies said in a blog post on Tesla's website.
Musk, who is also chairman and a major shareholder in SolarCity, unveiled an updated "master plan" last month in which he sketched out a vision of an integrated carbon-free energy enterprise, offering electric vehicles, car sharing and solar energy systems.
The deal includes a "go-shop" provision that allows SolarCity to solicit offers from other potential buyers for 45 days through Sept. 14.
Up to Friday's close, SolarCity's stock had risen about 26 percent -- valuing the company at $2.62 billion -- since Tesla first made an offer on June 21.
The companies said on Monday that SolarCity stockholders would receive 0.110 Tesla common shares for every share held.
The offer values SolarCity at $25.37 per share, based on the five-day volume-weighted average price of Tesla shares as of Friday.
SolarCity had formed a special committee to review Tesla's initial offer, which was pitched at 0.122 to 0.131 Tesla shares for each SolarCity share.
SolarCity's shares were down 5 percent at $25.36 in premarket trading on Monday. Tesla shares were little changed at $234.95.
The deal, expected to close in the fourth quarter, must be approved by a majority of the disinterested shareholders of Tesla and SolarCity, the companies said.
Tesla and SolarCity said they expect to save $150 million in costs in the first full year after deal closes as the combination improves their manufacturing efficiency and reduces customer acquisition costs.
The companies said the deal would also save customers money by lowering hardware costs and reducing installation costs.
Up to Friday's close, Tesla shares had risen 7 percent since the company first announced the offer.
Tesla's financial adviser was Evercore. Wachtell, Lipton, Rosen & Katz was its legal adviser. Lazard advised the special committee of SolarCity's board, while its legal adviser was Skadden, Arps, Slate, Meagher & Flom.
(Reporting by Swetha Gopinath in Bengaluru; Editing by Saumyadeb Chakrabarty)
This story originally appeared on Reuters