Exame: Why Elon Musk wants to buy a company which already owns

Why Elon Musk wants to buy a company which already owns

Tesla Motors of Elon Musk has just submitted an offer for the purchase of SolarCityof Elon Musk for a total of $ 2.86 billion. Is tie in the brain.

Musk is the largest shareholder of SolarCity and already owns the company 23%, so I would personally $ 140 million with their actions.

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On the other hand, it is also the largest shareholder of Tesla, a much larger company, which fell by about 11% at the end of the trading session after the announcementof the agreement.

It cost him about $ 715 million, so its net loss was $ 575 million. It's not a good start.

So, why is he doing this? There are basically two ways to view the question: or Musk, 44, is rescuing a troubled company that is run by his cousin Lyndon Rive, or are consolidating an empire in the clean energy sector with prices on the ground. Or both.

Scenario 1: Musk comes out to the rescue

The SolarCity is experiencing problems. The shares had fallen 60% in the year so farbecause the company defied the consensus profit projection in april 3 quarters andchanged its focus in relation to the growth of plants.

The most devastating blow, from the spiritual point of view, came during a conference call from last quarter, when the analyst Ben Kallo did executives one simple question: "what is the SolarCity?".

The conclusion was that the SolarCity had gotten lost on the way, changing its business model to offer a program of loans to homeowners for them to buy solar panels instead of doing leasing and reducing installation estimates three times in seven months.

Wall Street thinks it's too complicated, "said Kallo, who covers the company for Robert Baird & Co. ten companies monitored by Bloomberg had a" buy "rating for the action before the announcement Tuesday, while 11 said" keep "or" sale ".

Scenario 2: the construction of an empire

An alternative reading of the offer is that Musk acknowledges a good deal when he sees one. With stocks close lower prices from 2013, the prize of 21% the 30% proposed by Tesla still represents a historically low valuation of less than $ 2.9 billion for one of the largest installers of solar panels in the world.

This allows the Musk integrate the tripod of clean energy in a way never seen in the world: electric cars, solar and storage batteries to power networks, all in one place.

If so, it will be possible to provide all their energy needs without even leaving the Tesla family. Forget economies of scale (which are significant), we are talking about a powerful brand building.

And add batteries to solar energy is something that is about to become increasingly common, according to a recent analysis of Bloomberg New Energy Finance.