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Tesla reaches deal to acquire SolarCity

SolarCity stockholders will receive 0.110 Tesla common shares per SolarCity share. Tesla, which is headquartered in Palo Alto, Calif., previously said it would offer $23.56 to $25.30 per SolarCity share.

A majority of each company's independent shareholders must also vote to approve the acquisition, which Tesla expects to close in the fourth quarter.

Tesla said it needed to obtain "regulatory approval and meet other closing conditions" before the takeover could be completed.

But in trading Monday, SolarCity shares fell more than 7% to $24.74 while Tesla dropped 1.3% to $231.70 amid concerns about the companies' cash flow and the rationale for the deal.

In the announcement, Tesla said it hopes to scale its platform from just battery-powered cars and energy storage systems to a fully integrated sustainable energy company offering a one-stop shop for going green.

In the vision of Musk, after this agreement the company will become a clean energy giant producing the electric cars with the solar panels on their roofs and battery storage systems in the trunks.

Last month, Musk unveiled his "Master Plan" plan which laid out a vision of an integrated carbon-free energy enterprise, offering electric vehicles, auto sharing and solar energy systems.

Earlier this year in July, Elon Musk CEO of Tesla had revealed a Master Plan, Part Deux that aimed to provide consumers with a single source of hardware to fuel a lifestyle centered on low carbon lifestyle. On the call, the companies said they expect to achieve $150 million in cost synergies within the first year.

The electric vehicle manufacturer added that now is the right time for the merger citing the reason that it is getting ready to scale its Powerwall and Powerpack stationary storage while SolarCity is preparing to offer its next-generation differentiated solar solutions. SolarCity has entered into an agreement to merge with Tesla. Some analysts see it as a Tesla bailout of SolarCity.

The news of Tesla's interest in acquiring SolarCity came back in June, which tumbled Tesla's stock modestly.

The two firms announced the deal on Tesla's website, saying: "Solar and storage are at their best when they're combined".

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