Tesla Motors and SolarCity have confirmed a $2.6bn all-stock transaction that will see the electric automaker and solar panel manufacturer merge.

The merger will create a new sustainable energy company, which will develop residential, commercial and grid-scale products that enhance the way that energy is generated, stored and consumed.

Tesla is preparing to scale its Powerwall and Powerpack stationary storage products and SolarCity is getting ready to offer next-generation differentiated solar solutions.

The merger will integrate the companies products and provide customers with a simple one-stop solar and storage experience, which they claim is one installation, one service contract, one phone app.

SolarCity also wants to leverage the network of Tesla’s 190 retail stores and international presence to extend its reach.

By doing this, the solar PV installer says that it can reduce costs to the extent of $150m in the first year of closing.

Under the terms of the merger agreement, SolarCity shareholders will receive each 0.110 of Tesla’s common shares per SolarCity share. SolarCity’s shares have been valued at $25.37 per share.

Tesla says that the as part of the agreement, SolarCity has a 45-day period called ‘go-shop’, which will be valid till 14 September 2016. During this time SolarCity is allowed solicit alternative proposals during this time.

The transaction, which s subject to regulatory approval and meet other closing conditions, is expected to be closed during the fourth quarter of this year.

Image: SolarCity accepts proposal for merger with Tesla Motors for $2.6bn. Photo: Courtesy of Anusorn P nachol/FreeDigitalPhotos.net.