The two companies announced the all-share deal, which had been expected for several weeks, on Monday, although its lower-than-expected price sent shares in SolarCity falling, reports The Telegraph.
SolarCity, which is the US’s biggest supplier of solar energy, is 23pc owned by Mr Musk. The Tesla chief executive is also the company’s chairman and co-founder, while his cousins Lyndon and Peter Rive are its chief executive and chief technology officer respectively.
The companies said Mr Musk did not participate in a Tesla board vote on the deal, which could become the subject of potential lawsuits given the overlapping interests involved, and would not take part in SolarCity’s vote to approve it.
The merger is the latest step in Mr Musk’s “master plan” to make sustainable energy a widely available alternative to electricity from the grid and petrol-powered vehicles.
Combining the solar expertise of SolarCity with the battery power in Tesla’s electric cars will create “the world’s only vertically integrated sustainable energy company”, said the company. Last week Mr Musk described the initial separation of the two companies as “largely an accident of history”.
Mr Musk ultimately plans to develop a fleet of Tesla electric pickup trucks, lorries and buses, which will probably be unveiled next year.
After the markets opened on Monday, Tesla shares fell by almost 1pc and SolarCity was down by more than 5pc. At $25.83 per share, SolarCity’s shareholders will get 0.11 Tesla shares for each SolarCity one. Tesla initially offered between 0.122 and 0.131 of its shares for one of SolarCity’s back in June.
Mr Musk denied any conflict of interest in the merger, which was evaluated at SolarCity by a special committee of “independent and disinterested” board members.
As well as Mr Musk’s connection to both companies, another Tesla co-founder Jeffrey Straubel sits on SolarCity’s board, and Antonio Gracias, an investor, sits on both company boards.
SolarCity has until September 14 to solicit for buyers under a “go-shop” period. If it were to withdraw from the deal it faces a fee of up to $78.2m.
