Elon Musk, CEO of Tesla Inc. , appears in court during the SolarCity trial in Wilmington, Delaware, US, on Tuesday, July 13, 2021.
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Tesla shareholders allege company acquisition of solar composite Rescue limit, prompted by Musk, who sat on the company’s two boards of directors at the time. Shareholders also claimed that Musk was in control of Tesla’s board, although he appeared to be stepping down from some deal negotiations related to SolarCity.
If he lost, Musk would have had to pay out over $2 billion. The case can be appealed to the Delaware Supreme Court.
Vice Chancellor Joseph R. Slates, who decided the case shortly before his retirement, sided with Elon Musk, writing: “Elon was more involved in the process than a conflicting credit agent should be. Disputes among other Tesla board members were not entirely neutralized. With However, the Tesla board purposefully vetted the acquisition, and Elon didn’t stand in his way.”
Musk has denied that he put any pressure on Tesla’s board to pursue the deal. He also said the merger allowed Tesla to combine its battery business with solar PV facilities in Solar City.
during the trial, Musk said The SolarCity deal was part of his “master plan” he wrote in 2006 that was intended to accelerate the emergence of sustainable energy.
The case was a shareholder-derived action, a lawsuit brought by investors on behalf of a corporation, not individuals or funds. If the plaintiffs had won, the proceeds would have gone to Tesla and not to the stakeholders who brought the lawsuit.
Investors were skeptical of the deal when Tesla proposed it in June 2016, with the stock down more than 10% upon announcement.
During his testimony, Musk repeatedly argued that Solar City was able to raise capital even if it was not acquired by Tesla.
Prosecutors argued that Musk was only able to get approval for the SolarCity takeover by misrepresenting SolarCity’s financial well-being, saying that cash flow should be positive within six months. The plaintiffs argued that other financial experts agreed with that assessment. They also claimed that due diligence by third-party companies including Evercore was accelerated to hide SolarCity’s problems.
The contributors also argued, in the lawsuit, that Musk unveiled a product that had not yet worked — solar glass roof tiles — to convince investors that there was real intellectual property and a product that was close to commercial viability in SolarCity.
Slates also acknowledged: “As of experience, Tesla has continued to rely on other solar companies to manufacture, produce, install and sell parts of its solar products. In other words, the synergistic integration that Tesla hopes is still a work in progress. Despite this. These challenges, increased The value of Tesla significantly after the acquisition.”
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