Feds OK Tesla, SolarCity deal

Federal regulators have cleared the way for shareholders to vote on Tesla’s proposed acquisition of SolarCity.

The Federal Trade Commission on Thursday approved the proposed merger of the two Silicon Valley firms overseen by Tesla CEO Elon Musk and his cousins, SolarCity co-founders Lyndon and Peter Rive. Reuters first announced the news, saying the review was routine because the companies have few overlapping or competing business interests.

The proposed $2.6 billion, all-stock merger would combine the country’s largest solar panel installer with the expanding electric vehicle maker. Neither company has turned a profit. The merger has worried some analysts that Tesla will be taking on a cash-flow poor business as it tries to ramp up vehicle production, introduce the Model 3 and build the “giga” into its under-construction Nevada Gigafactory.

Skeptics have also questioned Musk and the Rives’ decision this week to buy $100 million in bonds issued by SolarCity. CEO Lyndon Rive told CNBC the executives bought the bonds “because it’s a very efficient way for the company to raise capital without paying expensive banking fees.”

Musk touts the merger as an obvious combination of green tech products, providing home and business owners a complete package of solar energy generation and storage with electric mobility. The companies plan to leverage Tesla’s growing number of storefronts to sell SolarCity products.

SolarCity suffered another down quarter, posting certain net losses of $55 million despite growing sales. The San Mateo-based company quickly announced layoffs, setting aside up to $5 million for severance packages.

The cuts include 108 employees at offices in San Francisco and San Mateo. The layoffs have begun, and will be complete by Oct. 19, according to the company. It employs about 13,000 workers to serve 285,000 customers.

The merger was announced Aug. 1. One hurdle remains — a shareholders vote. Musk, a major investor in both companies, will abstain from the decision.

 

Photo: U.S. Sen. Michael Bennet, D-Colorado, center, helps as SolarCity employees Jarret Esposito, left, and Jake Torwatzky install a solar panel on a home in Denver on June 18, 2010. Tesla is buying SolarCity. (AP/Ed Andrieski)

 

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