Tesla's offer to buy SolarCity cements Elon Musk's status as a mad scientist. The electric-car company he runs has bid up to $2.8 billion for the solar-panel installer he also backs. The idea of a renewable-energy roll-up is at best way too early and at worst just plain bonkers.
Musk owns about a fifth of both companies, is a co-founder and chairman of SolarCity and runs $33 billion Tesla Motors. A third Musk enterprise, rocket maker Space Exploration Technologies, has been buying debt in SolarCity, according to a report earlier this year in the Wall Street Journal. The merger proposal raises the financial intricacy toward the level of the circuitry in the SpaceX launch vehicle.
At the high end of the exchange ratio range proposed by Tesla, it would hand over shares worth $28.50 apiece for SolarCity, a company whose stock was trading at about $85 little more than two years ago. But investors don't seem to consider that a bargain. In the hours after the idea of combining the two companies was unveiled, Tesla lost more than $4 billion of market value.