The FTC says it’s OK. Tesla received approval from the U.S. Federal Trade Commission this week to proceed with its acquisition of solar energy company SolarCity, according to Electrek.
The deal is not done, as it must still be approved by the Securities and Exchange Commission (SEC). Shareholders have to vote to approve it as well, but approval by the FTC, which is required to review any merger or acquisition valued at more than $78.2 million, is a key step, Electrek reported.
The FTC reviews major corporate acquisitions and mergers for anti-competitive or antitrust issues. As Electrek points out, the automotive and energy industries are crowded and highly competitive, so no one expected an issue with the FTC, but it will still be good to check that one off the list.
One step previously passed was approval by the respective boards of directors. Earlier in August the SolarCity board accepted the $2.6 billion acquisition offer. Now the companies are in a 45-day “go shop” period that ends September 14, 2016. During the “go-shop” period SolarCity could seek other buyers, should it choose to do so. Go-shop provisions are a standard part of merger agreements after an agreement is approved by an initial buyer.
Shareholders also have to approve the SolarCity sale to Tesla. The SEC review reportedly must be finished before the shareholder vote.
Elon Musk, CEO of Tesla and the majority shareholder in both companies, will not vote on the acquisition. Others who are on both Boards of Directors have recused themselves from voting as well.
The merged firm will form an end-to-end energy capture, storage, and usage venture. SolarCity’s solar panels will capture energy. Tesla’s Powerwall home batteries will store and feed electricity to homes and businesses. And Tesla’s vehicles will be able to charge themselves from the Powerwalls.