Tesla Motors Inc. and SolarCity Corp. are said to be close to a merger deal, people familiar with the matter told Reuters on Saturday.
The two companies are in the final stages of carrying out due diligence on each other, and could agree on the terms of a deal in the coming days, though it is still possible that their negotiations end unsuccessfully, sources said on Saturday. Tesla CEO Elon Musk serves as chair of the solar panel company and works with two of his cousins, who serve as top executives at SolarCity.
Tesla announced last month that it had made an all-stock offer for SolarCity worth $2.8 billion. Tesla made the business case that the merger would create a one-stop clean energy shop, where consumers could buy solar panels, home battery storage, and high-performance electric cars under one single trusted brand.
SolarCity has kept quiet about Tesla’s offer since the June 27 announcement that it had formed a special committee consisting of two board members to evaluate the offer. Both companies have declined to comment on the merger being settled soon. Musk did comment during the “part deux” master plan on July 20 that he is looking to create a “smoothly integrated and beautiful solar-roof-with-battery product.”
Musk has recused himself of voting on the deal at both companies. Several Tesla and SolarCity executives, including Musk’s cousins SolarCity CEO Lyndon Rive and SolarCity board member Peter Rive, have also recused themselves from voting.
Support from analysts and Wall Street investors has been waning since the “part deux” announcement. The statement was a bit vague and unclear on the automaker’s strategy to become profitable, critics say. The $2.86 billion proposal to acquire SolarCity, announced last month, sparked the first wave of backlash by Tesla shareholders and analysts.