"If Musk wasn't a majority shareholder in both the companies, there would be very little chance for a deal like this to go through," Prabhu said. "They are still very different businesses and a slump in one business will be a drag on the whole company and become a distraction."
MJ Shiao, director of solar research at GTM Research, said he shares Tesla's vision that a comprehensive and integrated energy solution "will be necessary for consumers to control their own energy destiny in the wake of changing electricity rate structures across the country.
"However, it's unclear whether a merger is necessary for Tesla and SolarCity to build and brand these products together," Shiao said.
Last year alone, Tesla received a significant amount of revenue from selling lithium-ion battery systems to SolarCity; in fact, it amounted to 36% of all behind-the-meter battery revenue, according to GTM Research.
The global energy storage market is expected to double as homes and businesses adopt battery energy storage to supplement rooftop solar and other renewable energy systems, according to a new report by IHS.
Over the next decade, lithium-ion (Li-ion) batteries will become the mainstream energy-storage technology, IHS said, with more than 80% of global energy storage installations including the batteries by 2025.
SolarCity believes the merger will produce cost synergies of about $150 million in the first full year after the deal closes.
"We also expect to save customers money by lowering hardware costs, reducing installation costs, improving our manufacturing efficiency and reducing our customer acquisition costs. We will also be able to leverage Tesla's 190-store retail network and international presence to extend our combined reach," it said.
As part of the agreement, SolarCity has a 45-day period known as a "go-shop," which runs through Sept. 14. That allows SolarCity to solicit alternative proposals during that time. Each company today filed a Form 8-K with the SEC that provides additional details regarding the transaction.
SolarCity said that while agreeing on the merger is a "big step" it's not the "finish line." It expects the deal to close something in the fourth quarter of this year.
Before that can happen, the acquisition must approved by a majority of the disinterested shareholders of both Tesla and SolarCity voting at each shareholder meeting and win regulatory approval.
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