"Synergies" should make SolarCity and Tesla employees nervous.
It's official: The two public parts of Elon Musk's empire are combining.
SolarCity announced Monday that it had agreed to a $2.6 billion deal to be acquired by Tesla, ending a process that began in late June.
While a post on SolarCity's blog was upbeat, saying the firms would create "the world's only vertically integrated sustainable energy company," it also used the one word that should worry employees of both Tesla and SolarCity: synergies.
"We expect to achieve cost synergies of $150 million in the first full year after closing," the post from SolarCity said.
Elon Musk, who is both the founder of Tesla and a board member of SolarCity, has also been trumpeting that ability of the combined companies to be leaner and work well together.
The word "synergies," however, means cost cutting, and at least some of the cost cutting will come in the form of layoffs.
Here's a very rough back-of-the-envelope calculation illustrating the effect synergies could have on employees at these two companies: Assuming half of those potential synergies — $75 million — comes from reduced headcount and each worker costs the company $75,000, we could see about 1,000 employees let go.
The SolarCity post did not specify a headcount reduction, and the deal is certainly about much more than that, but it is safe to assume some employees should get a bit nervous.