Tesla says SolarCity would add $1 billion to 2017 revenue
By Alexandria Sage and Nichola Groom
SAN FRANCISCO/LOS ANGELES (Reuters) - Tesla Motors Inc (TSLA.O: Quote) said on Tuesday its $2.6 billion merger with SolarCity Corp (SCTY.O: Quote) would add over $500 million in cash to the electric carmaker's balance sheet over the next three years, while contributing over $1 billion to revenue in 2017.
Shares of Tesla fell another 2 percent in after-hours trade after tumbling 4 percent in afternoon trade to close at $197.73. Similarly, shares of solar panel installer SolarCity fell another 3.5 percent after falling 2.7 percent during regular trading at $19.07.
Tesla, whose shares had fallen 10 percent since the deal was made public in June, used an eight-page document posted on its blog and investor relations website after the market closed to convince skeptical shareholders in advance of a Nov. 17 vote on the deal.
Tesla Chief Executive Elon Musk, who is chairman of SolarCity and the largest shareholder in both companies, has described their combination as a "no brainer."
The document pitched the deal as part of Tesla's mission to combat the "catastrophic impact" of greenhouse gases on the environment by accelerating the world's transition to clean energy.
"The acquisition will enable us to transform into a truly integrated sustainable energy company," it said, referring to the promise of a unique provider of carbon-free energy, transportation and power storage.
Naysayers of the deal - whom Musk called out during a conference call with analysts, saying they had never accurately predicted Tesla's success - have said the merger is short on synergies and amounts to a Tesla bailout of money-losing SolarCity.
Tesla highlighted in the document what it said was expected improvement in SolarCity's GAAP revenue and profitability due to less reliance on leasing and more on purchases. Tesla said that nearly one-third of residential bookings in September were purchases, a four-fold improvement over the first quarter. Continued...