Acquisition of SolarCity could be delayed due to lawsuits, says Tesla

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Elon Musk-led Tesla Motor Inc said on Monday its proposed acquisition of SolarCity Corp could be delayed due to shareholder lawsuits challenging the deal.

The company said four lawsuits were filed in Delaware between Sept. 1 and Sept. 16 and a potential injunction on the proposed $2.6 billion mergers could delay the closing of the deal, reports Reuters.

The lawsuits allege, among other things, that both Tesla and SolarCity board members breached their fiduciary duties in connection with the proposed $2.6 billion mergers which the companies expect to close by the end of the year.

People view a Tesla car during the Auto China 2016 in Beijing, China

People view a Tesla car during the Auto China 2016 in Beijing, China

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 same period on skepticism that the company’s shareholders could shoot down the deal.

Tesla shares were up 1.6 percent at $208.76 in early trading on Monday on the Nasdaq. SolarCity shares were little changed at $17.43.

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.

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