Tesla is determined to complete its merger with SolarCity, despite some heavy criticism.
Shareholders of both companies will vote on the deal Nov. 17.
On Friday, the the merger earned an important endorsement. ISS, which advises shareholders on whether to approve mergers, offered its support for the controversial deal.
SolarCity shares jumped 8% on the news. Tesla rose 1%.
The deal has been criticized because Tesla CEO Elon Musk also serves as SolarCity’s chairman. He is the largest shareholder of both companies. That creates the potential for a conflict of interest for other shareholders. The worry is Tesla is acting to enrich Musk at the expense of other shareholders.
But ISS thinks Tesla has addressed that concern. In a press release Friday, The advisory firm said: “Tesla has—within the confines of its suboptimal governance structure – taken the requisite steps to reassure its shareholders: the board gave minorities significant leverage by requiring a majority of the minority vote as condition for approval.”
Here’s a translation: Tesla could have tried to push through the merger with Musk’s support alone. Instead, it’s asking everyone else to vote.
Sounds like democracy. Kind of.
Big Picture: The proposed merger between Tesla and SolarCity earned a major endorsement on Friday, with shareholders set to vote on the deal on November 17.
