Lawsuits May Delay Tesla / SolarCity Deal
Tesla Motors’ acquisition of SolarCity has hit a bit of a road bump in the form of four lawsuits filled to challenge the deal.
The lawsuits were all filed in early September and have various allegations ranging from “breached fiduciary duties” to “individual defendants would be unjustly enriched by the proposed Merger.”
Tesla still believes that the deal can be finalized by the end of the year, but these legal proceedings are certainly a setback.
Here are the four lawsuits:
- City of Riviera Beach Police Pension Fund v. Elon Musk, et al. , C.A, No. 12711-VCS
- Ellen Prasinos v. Elon Musk, et al. , C.A. No. 12723-VCS
- Arkansas Teacher Retirement System, et al. v. Elon Musk, et al. , C.A. No. 12740-VCS
- P. Evan Stephens v. Elon Musk, et al. , C.A. No. 1275-VCS
The assertions made in the lawsuits are described by Tesla as follows:
“Each of the Actions names as defendants the members of the Tesla Board, and certain of the Actions also name as defendants Merger Sub, SolarCity, and certain members of the SolarCity Board. The Actions seek to assert claims derivatively on behalf of Tesla, alleging, among other things, that the members of the Tesla Board breached their fiduciary duties in connection with the proposed Merger and, in some cases, that SolarCity and members of the SolarCity Board aided and abetted breaches of fiduciary duties and that certain individual defendants would be unjustly enriched by the proposed Merger. Certain of the Actions also assert putative class action claims against the members of the Tesla Board, including on the ground that the preliminary joint proxy statement/prospectus filed on August 31, 2016 allegedly failed to disclose material facts in connection with the proposed Merger.”
According to Tesla, these types of lawsuits are common in merger deals. The suits may delay the merger, but Tesla feels the overall claims are “without merit.”
Source: Automotive News