Tesla’s plan to takeover solar energy system installer SolarCity was given the green light on Thursday after shareholders at both companies voted in favour of the acquisition that Tesla CEO and founder Elon Musk first proposed in June.
The merger was approved by 85% of Tesla shareholders, excluding the votes of Musk and other affiliated shareholders, Tesla said in a blog post. SolarCity didn’t disclose what percent of its shareholders voted in favour.
“Your faith will be rewarded,” Musk told shareholders assembled at the company’s facility in Fremont, California.
The all-stock deal, valued at $2.1 billion, will create ‘the world’s only integrated sustainable energy company, from energy generation to storage to transportation,’ Tesla said.
Tesla expects SolarCity to add over half a billion dollars in cash to its balance sheet over the next 3 years, immediately account for 40% of the assets of the combined company on a historical cost basis, and contribute over $1 billion in revenue in 2017.
Heading into the deal SolarCity managed to strengthen its cash balance, with year-to-date revenue in Q3 2016 up 79% and gross profit up 91% compared to the previous year, in addition to a growing solar loan/system sale mix improving the company’s GAAP profitability.
SolarCity CEO Lyndon Rive and CFO Radford Small said in the company’s third quarter 2016 shareholder letter:
“The integration of SolarCity’s sales, service, and installation operations with Tesla’s extraordinary product development and manufacturing acumen will create a highly differentiated, integrated sustainable energy company ideally positioned to capture the $1 Trillion-plus global marketplace for transportation, energy sales and energy infrastructure.”
The acquisition vote comes as Tesla boosts vehicle production ahead of the launch of its new Model 3 sedan next year.