Investors aren’t too fond of the idea of Tesla buying SolarCity.
Shares of Tesla Motors dropped over 10 percent yesterday the American automaker proposed a buyout of SolarCity. That loss cut roughly $3 billion of Tesla’s $32 billion market cap, and actually exceeds the $2.8 billion being offered for the solar power startup.
SolarCity is also one of Tesla CEO Elon Musk’s creations, a rooftop solar company where Musk serves as chairman. Investors are concerned that the two companies will not fit together, even though Musk envisions a single entity for clean energy shoppers, allowing them to purchase an electric vehicle, home solar system and battery backup with one trip.
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Shareholders of both companies are expected to vote on the matter within months and Musk will recuse himself, allowing outside investors to make the decision. Musk remains confident and even said that he has “no doubt about this” during a call with analysts and investors before markets opened today.
SolarCity shares have fallen over 50 percent this year due to a highly competitive market, stirring some to criticize that the proposed deal is meant to save SolarCity.
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