Tesla shares fell as much as 8% on Wednesday, after the electric-car maker announced that it made an offer to buy SolarCity.
The drop, which started in after-hours trading Tuesday following the announcement, tanked Tesla’s market value by the equivalent of SolarCity’s entire market cap: about $2.1 billion.
In a letter to SolarCity CEO Lyndon Rive, Tesla’s board offered to acquire all outstanding shares of the company’s stock at $26.50 to $28.50 per share, which represents a 21% to 30% premium.
This would bring together two startups Elon Musk is involved in. Musk, Tesla’s CEO, is the chairman and largest shareholder of SolarCity, the biggest installer of rooftop solar systems in the US.
Meanwhile, SolarCity shares jumped 22% after-hours; they were up 8% in early trading on Wednesday. Shortly after Tesla’s offer, SolarCity said that it will carefully evaluate the proposal.
These two moves suggest that SolarCity investors are more welcoming of the news than Tesla investors.
A successful deal would bring together two clean-energy companies and create “the world’s only vertically integrated energy company,” Tesla’s letter said.