Behind Tesla carnage, signs of support for Musk's SolarCity deal
By Ross Kerber and Tim McLaughlin
(Reuters) - Some of Tesla Motor Inc's (TSLA.O: Quote) biggest investors have signaled support for CEO Elon Musk's plan to buy solar power company SolarCity Corp (SCTY.O: Quote), although the electric car maker's stock cratered on Wednesday, lopping more than the $2.8 billion value of the proposed deal off Tesla's market capitalization.
“It’s a natural evolution of their mission to transform transportation into a sustainable business,” said Joe Dennison, a portfolio manager of Zevenbergen Capital Investments, which has about 600,000 Tesla shares, or about 0.4 percent of shares outstanding.
It is still early in the process, he said, but "We expect it to go through and believe that most investors who actually own the stock understand management's long-term vision for the company."
That was not the market's broad reaction, sending Tesla's shares down more than 10 percent, and taking more than $3 billion off its market value, which now stands around $28.7 billion.
That was a blow to Musk, who is chief executive of Tesla, chair of SolarCity and the biggest shareholder in both companies. He is also the CEO of rocket-maker SpaceX.
He and Tesla management risk being distracted from rolling out the new Model 3 sedan, a mass-market electric vehicle key to the success of the young firm, analysts said, questioning whether merging two companies which both need substantial cash was a good idea.
The audacious entrepreneur envisions a one-stop shop for clean-energy fans, who could buy an electric car, home solar system and battery backup in a single visit. Some argued the two firms cater to different groups of customers, with little crossover.
Shares of the much smaller SolarCity rose more than 3 percent, valuing the U.S. market leader in residential rooftop solar panels at $2.15 billion. Continued...