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Tesla offers bid to acquire SolarCity

Posted at 12:13 PM, Jun 22, 2016
and last updated 2016-06-22 12:45:23-04

Electric car maker Tesla Motors wants to buy solar panel maker SolarCity for up to $2.8 billion in an attempt to create a one-stop shop for cleaner energy as consumers become more concerned about fossil fuels harming the environment.

The all-stock bid announced Tuesday values SolarCity Corp. at $26.50 to $28.50 per share, depending on a review of the company's books.

SolarCity's stock surged $3.31, or 16 percent, to $24.50 in after-hours trading following the announcement of the deal.

Tesla's shares sank $24.86, or 11 percent, to $194.75, signaling that many investors don't like the idea of the company relinquishing 8 to 9 percent of its current market value of $32 billion to expand into the solar energy industry.

Both of the companies, located about 17 miles apart in Silicon Valley, are burning through cash as they try to expand in still relatively small markets. Tesla has lost $1.2 billion in the past two years alone while SolarCity has suffered losses exceeding $1.1 billion during the same span.