Market Insider

SolarCity shines after board members recuse themselves from Tesla deal

A SolarCity employee carries a solar panel on the roof during installation at a home in Kendall Park, N.J.
Michael Nagle | Bloomberg | Getty Images

SolarCity stock jumped 5 percent Tuesday, continuing its week-long climb a day after the company announced it would allow a two-person committee to evaluate Tesla's takeover bid.

The electric-car company announced its offer to buy roughly $2.8 billion in SolarCity stock last Tuesday. The deal is valued at between $26.50 and $28.50 a share, a 21 to 30 percent premium over SolarCity's s closing price last week, according to FactSet.

Both companies are controlled by billionaire Elon Musk, and the boards are intertwined: Five SolarCity board members either work at Tesla, are on the Tesla board, or are related to someone who is, according to Recode.

To avoid compliance issues, the SolarCity board is leaving the decision of whether or not the Tesla proposal benefits shareholders to two directors, who don't have direct connections to the car company. Donald Kendall and Nancy Pfund will make the call.

The majority of board announced they would sit out any decision-making on the deal earlier this week. Elon Musk, Musk's cousins Peter Rive and Lyndon Rive, Antonio Gracias, and JB Straubel will all stay on the sideline, according to Reuters.

SolarCity's stock traded near $23.71 Tuesday, down from its 52-week high of $61.72. The stock has lost more than 50 percent of its value in since the year began.

Tesla meanwhile was up 3.5 percent Tuesday.