Tesla Motors has told regulators its planned merger with SolarCity could be delayed by lawsuits seeking to block the $2.6 billion merger.
All four lawsuits allege that Tesla executives and board members breached their fiduciary duties because they have interlocking interests in the two companies. One of the suits seeks an injunction to block the proposed merger.
The lawsuits were filed by the Arkansas Teachers Retirement System, the City of Riviera Beach Police Pension Fund, and two individual investors: P. Evan Stephens and Ellen Prasinos.
SolarCity is struggling financially, but the proposed acquisition by Tesla could is seen by some as a way to help shore up the solar installer’s finances.
In August, SolarCity told regulators it could incur up to $5 million in restructuring costs as part of a shift in strategy.
The proposed combination raised eyebrows from the start because of the close relationship between the companies. Elon Musk, Tesla’s CEO, owns 20% stakes in both companies and his cousins Lyndon Rive and Peter Rive are SolarCity’s CEO and chief technical officer, respectively.
The lawsuits could delay the proposed merger until a Delaware court hearing, which would not likely occur until mid-October.
Tesla says the suits have no merit, according to press reports. In announcing the merger, Musk told reporters the aim was not to prop up SolarCity, but create a unified solar-plus-storage product for consumers.
“It will be very difficult for the courts to blow this off,” James Cox, a professor at the Duke University School of Law, told Bloomberg Markets. “It’s a high-profile case, it’s a self-dealing case. This gets a much deeper look than most others would.”