Tesla Motors was the buzz of the automotive industry when more than 300,000 buyers lined up (most in a virtual way) this spring to reserve a Model 3 electric vehicle. Now, Tesla has generated a shorter line of interested parties, and the news isn't so rosy. The issue at hand is the California electric-vehicle maker's pending acquisition of solar-energy service SolarCity.
In a Securities and Exchange Commission filing, Tesla said four parties have filed lawsuits against the automaker over the pending buyout. The City of Riviera Beach Pension Fund, Arkansas Teacher Retirement System, and individual shareholders P. Evan Stephens, and Ellen Prasinos say that the relationship between Tesla chief Elon Musk and SolarCity management (Musk is SolarCity's chairman) is a little too cozy for Tesla to have objectively approached the prospect of buying out SolarCity. The four lawsuits were filed in Delaware courts between September 1st and 14th. Tesla says the claims are "without merit."
Shares of Tesla are down about 10 percent since the $2.6 billion buyout agreement was announced early last month. The companies will have a combined $5.2 billion in debt, which will necessitate Tesla to raise cash by the end of the year. Additionally, Tesla's net loss through June was $575.5 million on $2.42 billion in revenue. SolarCity's financials look even shakier, as the company took a $533.4 million net loss through June on just $308.4 million in revenue.
Even before the agreement was finalized, some analysts were saying that the acquisition seemed risky, with one analyst going as far as calling the buyout a "bailout" for SolarCity. Tesla has maintained that the acquisition makes strategic sense as the automaker looks to both make its massive Nevada Gigafactory as environmentally friendly as possible while providing Tesla owners with home-charging systems that could be powered by the sun.
In a Securities and Exchange Commission filing, Tesla said four parties have filed lawsuits against the automaker over the pending buyout. The City of Riviera Beach Pension Fund, Arkansas Teacher Retirement System, and individual shareholders P. Evan Stephens, and Ellen Prasinos say that the relationship between Tesla chief Elon Musk and SolarCity management (Musk is SolarCity's chairman) is a little too cozy for Tesla to have objectively approached the prospect of buying out SolarCity. The four lawsuits were filed in Delaware courts between September 1st and 14th. Tesla says the claims are "without merit."
Shares of Tesla are down about 10 percent since the $2.6 billion buyout agreement was announced early last month. The companies will have a combined $5.2 billion in debt, which will necessitate Tesla to raise cash by the end of the year. Additionally, Tesla's net loss through June was $575.5 million on $2.42 billion in revenue. SolarCity's financials look even shakier, as the company took a $533.4 million net loss through June on just $308.4 million in revenue.
Even before the agreement was finalized, some analysts were saying that the acquisition seemed risky, with one analyst going as far as calling the buyout a "bailout" for SolarCity. Tesla has maintained that the acquisition makes strategic sense as the automaker looks to both make its massive Nevada Gigafactory as environmentally friendly as possible while providing Tesla owners with home-charging systems that could be powered by the sun.
Related Gallery 2017 Tesla Model S Facelift
Sign in to post
Please sign in to leave a comment.
Continue