“It’s really all part of solving the sustainable energy problem,” Tesla Motors Chairman Elon Musk said during a conference call. “That’s why we are all doing this to accelerate the advent of a sustainable energy world.”
Musk said that the deal would accelerate Tesla's transition from electric-vehicle automaker into a fully integrated, renewable-energy products company.
With solar-panel installer SolarCity on board, Tesla could integrate solar cells onto the roofs of its vehicles and pair solar panels with its new energy storage products.
"[We're] anticipating several moves ahead," Musk said.
Musk is the chairman and biggest shareholder of both companies. He owns a 26 percent stake in Tesla, based in Palo Alto, California, and a 22.5 percent stake in SolarCity.
SolarCity is run by Musk's cousin, Lyndon Rive.
But the deal still needs the approval of a majority of "disinterested" shareholders of both companies.
Industry analysts said his motivation to pair Tesla with the San Mateo, California, solar company is related to creating a battery system that would store solar energy in homes and businesses.
For the next several months, much of the action in the hookup will be in board rooms and behind the scenes.
SolarCity has a 45-day "go-shop" period in which it can solicit alternative acquisition proposals.
It will have to pay Tesla a $78.2 million termination fee unless it ends the deal with Tesla in order to enter an agreement with a third party that initially made an alternative offer before the "go-shop" period ended.
In such an instance, SolarCity would pay a $26.1 million termination fee, according to a regulatory filing.
The deal is expected to close in the fourth quarter.
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