What's going on?

Tesla Motors said late on Monday that its proposed merger with home solar-panel installer SolarCity might be delayed due to lawsuits launched by investors that oppose the deal�

What does this mean?

The lawsuits claim that Tesla�s board members failed to do their job properly when approving the merger and that insiders (e.g. Elon Musk, who is the largest shareholder of both companies) would be unjustly rewarded. More generally, critics of the proposed deal suggest that Tesla is bailing out SolarCity, which has a lot of debt and more expenses than it has income. They say that Tesla will be weakened as a result.

Why should I care?

For the stocks: The deal looks on the rocks – but there�s still reason to believe it will get approved.
SolarCity shares are trading about 30% lower than what they would be valued at if the deal went through today. That suggests the market harbors some significant concerns that the deal won�t happen. There are, however, reasons to think that it will ultimately get approved (if these lawsuits don�t derail it). For one, there are many investors who are shareholders of both companies and who will likely want Tesla to subsume SolarCity rather than risk SolarCity running out of cash to run its operations.


The bigger picture: Tesla has other important things to focus on.
Earlier this year, Tesla launched its first mass-market car, the Model 3. The company has received over 400,000 pre-orders, but it still has to build and deliver the cars. A history of production delays suggest it won�t be a totally straightforward process. The SolarCity merger (arguably) risks unduly distracting the company from the more important task at hand.