Tesla and SolarCity Merger Gets Approval from Shareholders
This story originally appeared on CNBC.com on November 17, 2016; click here to view.
Shareholders for SolarCity and Tesla voted Thursday to approve merging the two companies.
“Tesla’s shareholders have overwhelmingly approved our acquisition of SolarCity,” said a statement from Tesla sent to CNBC. “Excluding the votes of Elon and other affiliated shareholders, more than 85% of shares voted were cast in favor of the acquisition. With SolarCity’s shareholders also having approved the acquisition, the transaction will be completed in the coming days.”
The Tesla shareholder meeting began at 4 p.m., ET. Watch the Tesla webcast meeting here.
Both Tesla and SolarCity shares are up more than 2 percent in afternoon trading.
The deal has divided investor and analyst opinion. Some Tesla shareholders have filed lawsuits against the deal, and critics have called it a bailout for SolarCity.
Chairman Elon Musk, who holds about 22 percent of SolarCity stock and 22 percent of Tesla’s, has recused himself from both votes, as have other insiders such as director Antonio Gracias and J.B. Straubel. Gracias, the founder of Valor Equity Partners, sits on both companies’ boards, and Straubel was part of Tesla’s founding team and serves as its chief technical officer, according to company filings.
The merger comes as the solar energy business is showing signs of a slowdown.
GTM research’s Global Solar Demand Monitor forecasts the solar energy industry will contract by 7 percent next year.
“It’s great for SolarCity. It doesn’t look as great for Tesla shareholders at this point,” Angelo Zino, an analyst with CFRA Research, told Reuterson Wednesday. Reuters also noted the MAC Solar Energy Index, an ETF comprised of solar energy stocks, is down 44 percent this year.
But Institutional Shareholder Services, which advises mutual funds and other institutional shareholders on such matters, has recommended the investors vote in favor of the deal. The influential firm said the acquisition for “a necessary step toward TSLA’s goal of being an integrated sustainable energy company.”
Earlier this month, Tesla and SolarCity executives made the case that SolarCity was on solid financial footing and wouldn’t drain Tesla’s resources.
Tesla said it expects SolarCity to add more than half a billion dollars in cash to Tesla’s balance sheet over the next 3 years.