Renewable Energy

Tesla says lawsuits could delay SolarCity deal

Elon Musk, CEO of Tesla.
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Elon Musk-led Tesla said Monday its proposed acquisition of SolarCity could be delayed due to shareholder lawsuits challenging the deal.

The company said four lawsuits were filed this month in Delaware, and a potential injunction on the proposed $2.6 billion merger could delay the closing of the deal.

The lawsuits allege, among other things, that Tesla and SolarCity board members breached their fiduciary duties in connection with the proposed merger, which the companies had hoped to close this year.

As of Friday's close, SolarCity shares were trading at a 31 percent discount to Tesla's stock swap offer, which valued SolarCity shares at $25.37 on Aug 1.

Tesla's shares have fallen nearly 11 percent in the period on skepticism that the company's shareholders could shoot down the deal.

Tesla shares were flat at $205.17 Monday afternoon on the Nasdaq. SolarCity shares also were little changed at $17.19.

Tesla has been dealing with troubles of its own. The company is facing a severe cash crunch and has said it plans to raise additional money this year to help fund the production of its new Model 3 sedan and build out a massive battery factory.

Some of the funds being raised could also support the SolarCity acquisition, if the deal went through, Tesla said.

Musk is the largest shareholder in both companies, and if the deal goes through, his stake in Tesla could increase to 23.4 percent from about 21 percent, including the conversion of his current stake in SolarCity.