Tesla Offers to Acquire SolarCity — Energy Journal

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ELON MUSK IS CHAIRMAN OF BOTH TESLA, SOLARCITY

Elon Musk proposed combining Tesla Motors Inc., his electric-car company, and solar-energy company SolarCity Corp. in an all-stock deal, Mike Ramsey, Lynn Cook and Mike Spector report. The deal for Tesla to buy SolarCity values it at up to $2.8 billion.

Mr. Musk is the chairman and largest shareholder of both companies. He recused himself from voting on the deal at the Tesla board meeting at which it was approved, and will do so for any vote on the SolarCity board as well, the offer letter said

He said “the timing seemed to be right” for the deal because Tesla is ramping up production of batteries used in conjunction with solar panels, SolarCity’s main business. But the deal also would add to the growing complexity and vertical integration of Tesla and add an unprofitable operation to its already-strained finances.

Tesla’s bid stretches the bounds of industrial logic and also some ethical limits since Mr. Musk is the largest shareholder in each firm, Charley Grant and Spencer Jakab write. Justin Lahart writes that Tesla’s offer puts bearish bets in a very bad place.

THE $50 BILLION OIL BEAR

The natural-resources fund manager at T. Rowe Price, Shawn Driscoll, believes we are in a 10-to-15-year bear market in energy and commodities, Ken Brown reports. Mr. Driscoll has positioned his own $5.2 billion in assets largely against a rise in prices. So far that has worked out well, but he’s also under a lot of pressure.

Mr. Driscoll’s influence extends far beyond his own funds, making him one of the most important energy bears in the market. T. Rowe Price collectively has about $50 billion invested in energy and natural resources across its diversified stock funds.

Mr. Driscoll is under pressure because T. Rowe Price, which had $765 billion in assets at the end of the first quarter, has bet its own future on the ability of fund managers to beat the market.

BHP BILLITON TAKES STEPS TO BOOST OIL OUTPUT

BHP Billiton Ltd. Chief Executive Andrew Mackenzie said the energy and mining giant has started tapping into its backlog of drilled oil wells in Texas and could profitably drill new wells if oil prices hold above $50 a barrel, Nicole Friedman reports.

It’s the latest sign that the recent rally in oil prices could encourage U.S. producers to keep production high, which could keep a global oversupply of crude from easing.

Separately, investors have launched a $3.3 billion venture to create one of thebiggest pan-African energy companies, the Financial Times reports.

MARKETS

Oil prices rose on Wednesday on expectations of a decline in U.S. crude stockpiles.

The U.S. Energy Information Administration will release its closely-watched inventory data later on Wednesday. The American Petroleum Institute, an industry group, said late Tuesday that U.S. crude stockpiles fell 5.2 million barrels last week. A survey of analysts by the Wall Street Journal expects a 1.6-million-barrel decrease.

In the near term, oil investors are keeping a close eye on the upcoming U.K. referendum on Thursday over the country’s membership in the European Union.

Read our latest market report at wsj.com.