Electric car maker Tesla said today it has won agreement from solar panel installer SolarCity to acquire the solar company for $2.6 billion, confirming a deal that has been criticised on Wall Street.
Tesla announced the bid in late June, but it drew jeers on Wall Street, in part because of skepticism over the motives of Tesla chief executive Elon Musk, who is also chairman of SolarCity, as well as a major shareholder.
Some analysts also questioned whether the deal would divert Tesla's attention from an ambitious plan to significantly expand electric-car production in the next few years.
But Tesla said the buyout would enable it to achieve lower hardware costs and boost manufacturing efficiency, creating the "world's only vertically integrated sustainable energy company. Solar and storage are at their best when they're combined," Tesla said.
The deal is a major part of Musk's master plan "part deux" that calls for the company to offer consumers a single source of hardware to power a low-carbon lifestyle.
Under the all-stock deal, SolarCity shareholders will receive 0.110 Tesla common shares.
The agreement allows SolarCity to solicit alternative proposals for 45 days. SolarCity shares fell 5.5 per cent to $25.23 in pre-market trade, while Tesla rose 0.2 per cent to $235.25.