In an updated SEC filing this morning, Tesla (TSLA) disclosed that it is fighting 4 different lawsuits filed by stockholders between September 1, 2016 and September 14, 2016, over the SolarCity (SCTY) merger. The procedures could potentially delay the deal by pushing the date for a vote on the merger.
Tesla lists the 4 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 company describes the assertions made in the suits:
” 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.”
Tesla believes that the claims are “without merit”.
These kinds of lawsuits happen routinely after the price of a stock is affected negatively following a particular event. In this case, the proposed merger between Tesla and SolarCity. Both Tesla and SolarCity faced similar lawsuits in the past, but what is particularly interesting with these ones is that they could significantly affect the merger.
Tesla reports in the same filing:
“On September 8, 2016, the plaintiff in the Prasinos action filed a motion for a preliminary injunction to prevent Tesla from consummating the Merger or any vote thereon and a motion for expedited proceedings. On September 16, 2016, the Court set a schedule for consolidation of the Actions and determination of a plaintiffs’ leadership structure, and the Court scheduled a hearing for October 18, 2016, to consider any motion for expedited proceedings.”
If successful, it could delay the deal. We asked Tesla for a comment on the timeline of the deal following these new lawsuits and we will update if we get an answer.
FTC: We use income earning auto affiliate links. More.
Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.