When electric vehicle maker Tesla Motors Inc. (NASDAQ: TSLA) announced in late June its offer to acquire SolarCity Corp. (NASDAQ: SCTY) in an all-stock transaction, the range given for the valuation of SolarCity was $26.50 to $28.50. Monday morning the offer was finalized at $25.37 (0.110 share of Tesla stock). SolarCity’s shares closed at $26.70 on Friday.

The transaction has been approved by the boards of both companies, no surprise since Tesla CEO Elon Musk is also chairman of SolarCity’s board and the largest shareholder in both companies. The deal is expected to close in the fourth quarter, subject to the approval of “a majority of disinterested shareholders” of both companies.

According to a presentation posted on Tesla’s website, the transaction will create $150 million in “direct cost synergies” in the first full year after the deal closes. The company also lists five items in its “financial profile” of the merger:

• Greater visibility on cash flow dynamics of the combined company
• Apply Tesla discipline to capital expenditure roadmap
• Confidence in initial capitalization and goal to de-lever in future
• Revenue growth driven by new product development
• Realized synergies aid cash flow

We’ve never been especially fond of this deal, nor were several analysts firms. The announced deal has not caused us to change our mind.

SolarCity’s shareholders are reacting pretty much as you might expect in premarket trading Monday, taking the shares down about 6.2% to $25.05. The stock’s 52-week range is $16.31 to $61.72, and the consensus 12-month price target is $26.19.

Tesla stock traded up about 0.1%, at $235.11 in a 52-week range of $141.05 to $271.57. The 12-month price target on the stock is $252.58.

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