Tesla Motors Inc. has said it has agreed to sell the Canadian-based company’s main rival to Intel Corp., ending months of speculation that the company would pursue a takeover bid.
The deal, which Tesla confirmed on Wednesday, would combine the Palo Alto, Calif.-based electric car maker with the Silicon Valley chipmaker in a deal valued at $5.8 billion.
The company will pay $5,700 per share for the combined company, with a 20% premium over its closing price of $1.15 per share in late February.
The move, which will also see Tesla’s chief executive, Elon Musk, take a seat on the board of the combined entity, is a dramatic reversal for the company that has become synonymous with the idea of a clean, green future and its quest to drive a revolution in technology that would revolutionize the way humans interact with each other.
A Tesla spokesperson said in a statement: “The transaction is subject to the customary closing conditions, including obtaining regulatory approvals from Canada and U.S. regulatory agencies.
We look forward to sharing more information as it becomes available.”
Intel, whose chips are found in some of the most advanced consumer electronics, has been an investor in Tesla since the carmaker was founded more than 30 years ago.
In February, it announced that it had bought the Palo Canaries company, a key player in a wave of semiconductor manufacturing in Canada that began in the early 2000s.
Tesla had been working on the deal since late February and was expected to make it official on Tuesday, according to the company.
The purchase price for the Tesla-Intel deal is not yet known.
Tesla will now have to sell its shares in order to get the deal done.
The combined company will not have to follow all of the same stock market rules that are typically required to buy or sell stocks.
The transaction is expected to close by the end of the year.
The Tesla-Ipsos data firm expects the combined Tesla and Intel would generate an annual revenue of $2.1 billion.
It also said Tesla will have to repay $1 billion of debt in 2018.
The merged company will have a market capitalization of $8.8 trillion, according the Bloomberg Billionaires Index, compared with $16.4 trillion for Intel.
Tesla is valued at about $80 billion.