A lawsuit between Tesla shareholders and Elon Musk ended on Wednesday with a Delaware court ruling in favor of CEO Elon Musk. Shareholders believe that Tesla’s acquisition of SolarCity in 2016 is a bailout of a company owned by two of Musk’s cousins, which is unfair to them.
The trial began in July 2021, and in the first few days Musk remarked that it was a stock deal that led to “no financial gain.” Shareholders have demanded that Musk pay $ 2.6 billion for the acquisition of SolarCity, after claiming he had put a lot of pressure on Tesla’s board to buy the company.
Shares of Tesla fell more than 10 percent after the announcement of the acquisition of SolarCity, which made investors skeptical about the benefits of the deal. The plaintiffs allege that Musk persuaded Tesla’s board to acquire the company by misrepresenting SolarCity’s financial condition. Musk said the company could have a positive cash flow within six months, but shareholders said no financial expert agreed.
Musk also said that in the early days of the case, the acquisition of SolarCity was crucial to his “Master Plan, Part Deux,” a sequel to the CEO’s top-secret book on the world’s transition to sustainable energy. He also stated that he did not control the appointment or compensation of SolarCity board members at the time of the acquisition and did not affect the terms of the deal.
The trial judge said (via CNBC): “Elon was more involved in the process than he should have been a confidant. And the conflicts between the other members of Tesla’s board were not completely neutralized. With that said, the Tesla board carefully checked the acquisition and Elon did not stand in his way.
If Musk were to lose the case, he would have to pay more than $ 2 billion, one of the largest court decisions ever made against a single person. CNBC says the decision is likely to be appealed.
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Tesla’s $ 2.6 billion acquisition of SolarCity rules in favor of Elon Musk
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