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Subject: Elon Musk, chief executive of Tesla Motors, brushed aside criticisms of corporate over-reach and conflicts of interest yesterday on Monday as he…
Excerpt: English text from the archived bilingual edition · Chinese edition
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Elon Musk, chief executive of Tesla Motors, brushed aside criticisms of corporate over-reach and conflicts of interest yesterday on Monday as he unveiled an agreement to pay $2.6bn in stock for SolarCity, the solar power company where he is also chairman
The electric car and space entrepreneur drew criticism when he first publicly proposed a deal in June, including from Wall Street analysts who have usually been among the biggest boosters of his hugely ambitious ventures
The attempt to create what Mr Musk described as the first vertically-integrated sustainable energy conglomerate has drawn widespread scepticism. Analysts continued to question yesterday wether the deal would distract Tesla at one of the most important moments in its history, as it tries to overcome a spate of production problems and massively increase its car production
Given Mr Musk’s personal stake of around 20 per cent in both companies, the offer also raised questions about whether he was using Tesla to bail out the struggling power company. whose shares had fallen by nearly two-thirds from a year ago. However, the hit that Mr Musk’s Tesla stock suffered when he suggested the deal has more than cancelled out his potential gain from selling SolarCity
Addressing accusations of personal conflicts, Mr Musk described media critics as “silly buggers, honestly”. Keeping the two companies separate as they tried to integrate their solar power and electric storage products would create more conflicts of interest than merging them, he said
But investors remained underwhelmed by the idea, with Tesla shares dropping 2 per cent when trading opened on Monday. SolarCity’s shares also fell, losing 6.25 per cent after it agreed to an exchange ratio of 0.11 of a Tesla share for each share in the solar company, below the ratio of 0.122-0.131 that Mr Musk had first suggested in June
The deal also needs the approval of a majority of shareholders on both sides, with Mr Musk agreeing not to vote his shares
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