Tesla Sued Over SolarCity Purchase

Tesla has plans to purchase SolarCity, a solar-energy service provider, but its shareholders aren’t happy about it.

According to a Securities and Exchange Commission filing, four shareholders are suing Tesla because they are uncomfortable with Tesla CEO Elon Musk’s relationship with SolarCity – he’s the chairman.

SEE ALSO: Tesla Announces $2.6B SolarCity Acquisition

The four parties are the City of Riviera Beach Pension Fund, Arkansas Teacher Retirement System, and individual shareholders P. Evan Stephens and Ellen Prasinos. All four suits were filed in Delaware between September 1st and 14th, and Tesla says they are “without merit.” The plaintiffs feel that Musk’s SolarCity chairmanship means that since he’s also the CEO of Tesla, he’s unable to make an objective decision concerning the acquisition.

SEE ALSO: Tesla Investors Call for Changing Board and Musk’s Control After SolarCity Proposed Bid

The $2.6 billion buyout agreement was announced last month, and shares of Tesla have dropped about 10 percent since. Once the deal is completed, the two companies will have a combined $5.2 billion in debt, which means Tesla will need to raise cash by the end of this year. Tesla has already had a net loss of $575.5 million with $2.42 billion in revenue through June.

SolarCity’s financial situation isn’t any rosier: The company posted a net loss of $533.4 million through June with revenue of $308.4 million.

Analysts have already called the acquisition risky and a “bailout,” but Tesla has responded by saying the deal makes sense for the company since it’s looking to make the gigafactory it’s building in Nevada to be as environmentally-friendly as possible while also considering the possibility of building solar-powered electric-car chargers for consumers’ personal use at their homes.

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