Subject category:
Finance, Accounting and Control
Published by:
Harvard Business Publishing
Version: 2 November 2018
Revision date: 27-Nov-2018
Length: 28 pages
Data source: Published sources
Abstract
Supplement to the A case. 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 USD2.6 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.
Location:
Industries:
Size:
> 1 billion; Fortune 500
Other setting(s):
2016
About
Abstract
Supplement to the A case. 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 USD2.6 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.
Settings
Location:
Industries:
Size:
> 1 billion; Fortune 500
Other setting(s):
2016