• People view a Tesla car during the Auto China 2016 in Beijing, China, April 25, 2016. REUTERS/Jason Lee/File Photo

    People view a Tesla car during the Auto China 2016 in Beijing, China, April 25, 2016. REUTERS/Jason Lee/File Photo (Copyright Reuters 2016)

  • FILE PHOTO --  Elon Musk, Chairman of SolarCity and CEO of Tesla Motors, speaks at SolarCity?s Inside Energy Summit in Manhattan, New York October 2, 2015. REUTERS/Rashid Umar Abbasi/File Photo

    FILE PHOTO -- Elon Musk, Chairman of SolarCity and CEO of Tesla Motors, speaks at SolarCity?s Inside Energy Summit in Manhattan, New York October 2, 2015. REUTERS/Rashid Umar Abbasi/File Photo (Copyright Reuters 2016)

  • People view a Tesla car during the Auto China 2016 in Beijing, China, April 25, 2016. REUTERS/Jason Lee/File Photo

    People view a Tesla car during the Auto China 2016 in Beijing, China, April 25, 2016. REUTERS/Jason Lee/File Photo (Copyright Reuters 2016)

Tesla says lawsuits could delay SolarCity deal

Features Reuters

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.

Continue Reading Below

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 merger could delay the closing of the deal. (http://bit.ly/2cMzghr)

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 merger, which the companies expect to close by the end of the 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 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.

Continue Reading Below

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.

(Story corrects to remove paragraph 6, which incorrectly referred to Tesla having its shareholder meeting over the proposed merger this week.)

(Reporting by Rachit Vats in Bengaluru; Editing by Saumyadeb Chakrabarty)