It's a proposal that would unite two companies on shaky financial ground as they plow into relatively new markets. One makes electric cars, the other installs solar panels. There are few obvious synergies.
Perhaps even more puzzling are the motives of Elon Musk, a polarizing billionaire who is the chairman and largest shareholder of both companies.
The overlap created a glaring conflict of interest that's fueling concerns about whether Musk is milking Tesla's higher market value and better brand recognition to bail out SolarCity — a company run by his cousin, Lyndon Rive.
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The second-guessing probably wouldn't be as widespread if not for the murky logic underlying the deal and Musk's history of drawing upon Tesla and another of his companies, rocket ship maker Space X, to bolster SolarCity.
Musk, 44, insists he is just showing good business sense, describing Tesla's bid of up to $2.5 billion as a "no brainer" shortly after it was announced earlier this week.
Investors, though, aren't so sure. SolarCity's shares have edged up by just 5 percent to $22.20 since the all-stock bid was made, well below the $23.56 to $25.30 currently being offered by Tesla. Meanwhile, Tesla's stock has sank by 12 percent to $193.15.
The offer "raises a number of questions around governance that may test the bond of trust," Morgan Stanley analyst Adam Jonas wrote in a research note. One of Tesla's most ardent supporters, Jonas downgraded Tesla and lowered his target price on the shares by 26 percent to $245.
S&P Global Market Intelligence analyst Efraim Levy believes investor resistance eventually may prompt Tesla to withdraw its bid.
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The backlash still may not be enough to deter the outspoken Musk, who has cultivated the image of a maverick since he made his initial fortune as co-founder of online payment service, PayPal, which eBay bought for $1.5 billion in 2002.
Musk is hailed as a visionary by admirers who applaud him for shaking up the auto industry with Tesla's sleek, electric vehicles and drawing up plans to send people to Mars on Space X's rockets. His detractors ridicule him as an unpredictable control freak, an image that Tesla's bid for SolarCity may reinforce.
So far, no one has paid a bigger price for Tesla's baffling bid than Musk. The value of his combined holdings in the two companies fell by nearly $1 billion in three days to pare his fortune to $11.4 billion, based on Forbes' latest estimates. Musk owns a 26 percent stake in Tesla and a 22.5 percent stake in SolarCity.
