Loss of Tesla SolarCity to buy loss

Polaris solar PV net news: Tesla has just unveiled their 2016 Q2 earnings report shows that Tesla car revenue of $ 1.27 billion in the second quarter, up from $ 955 million in the same period last year net loss of 293 million dollars, compared with a net loss of $ 184 million in the same period last year had increased.

Tesla’s loss is not news, but they had 13 consecutive quarters of losses, Thomas still appears on the earnings call with a smile. The funny thing is, Tesla was busy buying another loss loss SolarCity, which many analysts Meng was forced. Morgan Stanley took the lead in asking questions, you want to SolarCity and Tesla Motors to merge into a company, then the next step is SpaceX, ready to put into space up?

Iron Man laugh: synergy between Tesla and SpaceX is very small, the cooperation between the two is very small, so I think it is not appropriate to merge the two companies. As for SolarCity, that’s a strong synergistic effect, Tucson, you pattern broken, clothes on stage.

Now, why did reporters take you see musk this madman of the SolarCity to acquire losses were heavy, so that you can force full of analysts at Morgan Stanley before flying out.

The evening of August 1, price of Tesla Motors $ 2.6 billion merger SolarCity (NASDAQ:SCTY). SolarCity is the main us solar power solutions provider SolarCity can provide system design, installation and financing, comprehensive solar energy services and construction supervision.

SolarCity solar panel stocks of power can not only recharge the Tesla Motors, can also be stored in the Powerwall play cycle. Cooperation between the two companies began in 2009, SolarCity was involved in electric vehicle charging stations, and to build a fast-charging equipment for Tesla.

Tesla had formally made an offer to purchase back in January before SolarCity, the final purchase price of us $ 2.6 billion, from July 25 to the 29th five-day weighted average share price for the benchmark, SolarCity-for-0.11 times times of Tesla common stock shares, SolarCity price US $ 25.37 a share, below the closing price July 29 SolarCity (26.4 u.s. dollars).

Weighted average price algorithm, Tesla weighted average prices for the week of July 25 (total daily price */5th) $ 228.86, SolarCity to $ 27.18, converting about SolarCity is equal to one unit change to 0.11 shares of Tesla.

Worth noting is this deal contains a “wait and see” (go-shop) provisions is to allow the SolarCity offer within 45 days to seek other potential buyers. That is, the buying pattern has been set, but do not rule out other bidders.

Merge the two loss-making companies

Early on June 21 this year, Tesla announced through the stock exchange acquisition SolarCity, Tesla, SolarCity 0.122 times 0.131 times to times of Exchange shares of common stock, the corresponding purchase price per share of $ 26.5 to $ 28.5, SolarCity6 20th Hong Kong (US $ 21.88) premium 21% to 30%. Tesla’s offering to pay up to a maximum of us $ 2.8 billion acquisition of SolarCity.

After the announcement the next day, Tesla shares fell 11.05%, and SolarCity up 3.26% on the day, as of July 28, 25% per cent to $ 27.36.

Stock market ups and downs don’t think Tesla premium to SolarCity, SolarCity was considered overvalued prices. Premium is based on the acquisition of the company’s value and the expectations of shareholders to decide, given market prices a bit lower.

JPMorgan SolarCity’s rating as a hold, the price is $ 25 per share, closing price premium on June 21 (US $ 21.19) between 25% and 35%, the corresponding per share purchase price is between $ 28 and $ 26.5, JPMorgan believes that Tesla high valuations for SolarCity, his price is a maximum price of $ 2.744 billion acquisition of SolarCity. And SolarCity’s current market value is more similar, as of July 29, the total market capitalization of $ 2.625 billion.

Why about this takeover there so many sceptical voices? Acquisition preliminary is set, the market is bullish on the merger?

SolarCity’s financial situation has not been good. 2016 report shows net loss of nearly $ 25 million in the first quarter, carrying only US $ 300 million in cash. Debt to asset ratio is high, close to 80%, to know the value of PV equipment industry is 62.23%.

High asset liability ratio and original SolarCity solar lease-related, users can choose to lease power plants, pay a monthly rental of fixed equipment, spontaneous use, surplus power into the grid, low purchase of electricity from the grid. SolarCity to sell electricity to the power company, charged the monthly electricity bill. Of course users can also select a one-time buyout equipment, spontaneous use, their own maintenance. With the provision of the SolarCity rent or electricity average per unit is cheaper than power 15%, so most users will choose to lease or purchase mode. Thus, rent and electricity for SolarCity’s main source of income.

Solar, photovoltaic power plant construction and SolarCity installed the high initial investment and profit model far hydrolyze not close thirsty again, only short-term financing to support their cash-flow. Since 2016, SolarCity has raised more than $ 1.5 billion in the project financing. SolarCity has been losing money for 5 consecutive years.

Face of five consecutive years of losses of SolarCity, Tesla for stock acquisition, Tesla first quarter of 2016 the book only $ 1.44 billion in cash if they take cash, all of a sudden come up with us $ 2.8 billion, is enough.

But buying does not bring immediate cash flow to SolarCity, pressing, SolarCity on acquisition will make Tesla back about $ 6.2 billion of total liabilities.

Meanwhile, Director of Tesla and SolarCity there is more than one potential conflict of interest issues interests overlap, mergers and acquisitions with the assistance of SolarCity. Musk is a leading shareholder in both companies, ownership over 20%, and also is the Chairman of both companies. His cousin Lyndon ˙ Rive (LyndonRive), ˙ love (PeterRive) is the founder of SolarCity, and SolarCity directorship. Tesla co-founder JB˙ Leland Stauber (JBStraubel) as Director of SolarCity. Investor Anthony ˙ Gracias (AntonioGracias) also serves as a Director of two companies.

Collaborative law firm California Attorney AsenVelinov to Caijing reporters, United States there is no specific legal provision family trading is not allowed. Tesla and SolarCity trading potential benefits associated, but steps can be taken to reduce the risk of future, Board staff, such as musk, has avoided voting, decided by the investors with no interests to purchase. Asen says, the United States Securities and Exchange Commission, as long as your lawful disclosure of, and can do almost anything.

From a financial point of view, this is not an ideal acquisition. But the two companies are the same even, operational aspects of this overlap, upstream and downstream of the synergistic effects of integration after the merger. Elon said the combined cost might drop up to half the cost synergies could reach $ 150 million in the first year.

The most direct benefit is that capital market financing. In announcing the acquisition, SolarCity plans to raise $ 300 million for its new solar project. The integration of upstream and downstream industry chain for capital markets, is a compelling story.

Tesla’s main purpose of the acquisition is to put customers all round, from power, charge to travel, cross-selling opportunities for both companies. Elon ˙ musk wanted to well, “when we sell Powerwall, most users consult solar equipment, so cannot be sold directly in the Tesla shop solar solutions is ridiculous. If the Tesla store sales upcoming Model3, but we also sell solar equipment with a client, instant sales became double. ”

United States investment bank analyst at investment bank Needham&Company Y.EdwinMok after that, taking into account the two companies merger synergies will lead to reduced management costs, Powerwall led on solar power plant in the upper reaches, SolarCity will turn a profit, this merger will bring in the long term sustainability of cash flow.

Tesla through SolarCity to achieve the transformation of the energy and auto service providers, in terms of volume and business development breakthrough. Tesla will play an electric vehicle design, engineering, manufacturing advantages help SolarCity push panels, research and development, and SolarCity and Tesla’s target customer overlap, can borrow SolarCity wide distribution network of sales channels, achieving massive sales.

Mr MASKEY energy Empire of dreams

Tesla’s strategy has changed, SolarCity is among the most important part. Elon ˙ Mr MASKEY said via mobile phone APP can be scheduled, installing solar panels and receive follow-up services. SolarCity and Tesla even of the same root, now is a good time. Tesla preparing large-scale production Powerwall, high-end solar SolarCity is prepared to provide. Powerwall with solar panels can be integrated into a clean, intelligent and even independent home energy systems, implementing a one-stop charging and storage.

Tesla’s acquisition of SolarCity about Tesla’s energy transition. Not only the electric car maker, geek Thomas g wants to do everything, from energy supply service, battery manufacturer, Tesla gave him a blueprint glued to a piece of the puzzle. Elon ˙ musk wants to acquire integrated upstream and downstream industry chain, namely, electric cars, solar panels and energy storage, Tesla Powerwall (home energy storage battery) and SolarCity’s energy services and become a one-stop energy supplier.

Musk action frequently in recent days, on July 30, the official unveiling of the Tesla power plant Gigafactory. This United States Super battery factory in Nevada for the Tesla electric car battery production, as well as drones and other batteries provide energy products and energy industries.

This is Elon ˙ musk mix, Super battery plants on, under solar power, Tesla is a electric vehicle businesses? It is clear that in the eyes of musk, is far from enough.

Musk recently on its website to write a long message, announced that Tesla’s master plan for the future, is summed up in four points: integrating renewable energy storage, rich product line and automatic transmission, sharing travel. Its website domain name from teslamotors.com replacement for Tesla.com.

Super plant opening and acquisitions SolarCity is an important link in the transformation of the Tesla. According to automotive news LeftLaneNews reported that Tesla Gigafactory battery plant started operation, the factory has only completed 14%, is expected to next July, factory of one-third can be completed. Tesla Powerwall household batteries will occupy half of Gigafactory factory.

Tesla also said the factory’s roof will be covered with solar panels, excess power will be stored by Tesla’s energy storage devices, for use when there is no light. You can imagine, Gigafactory will become a user of SolarCity.

Original title: loss of Tesla, SolarCity acquisition losses?

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