A judge sided with Elon Musk in a court case brought by investors over Tesla’s acquisition of SolarCity, which they claimed was pushed by Musk to bail out the solar installer.
The court found that Musk was more involved than he should have been in the acquisition considering his interest on both sides, but the judge ultimately determined that Tesla didn’t overpay for SolarCity.
In 2016, Tesla’s board and shareholders approved a $2.6 billion acquisition of SolarCity with a strong majority, but not everyone was happy. Several Tesla shareholders ended up filing lawsuits against Tesla’s board and Musk specifically.
They claimed that Musk initiated the acquisition to bail out SolarCity, which he was heavily invested in and was having financial difficulties at the time.
Some investors were also concerned about potential conflicts of interest because of all the relationships between Musk, his family and friends, and the two companies. SolarCity was led by Musk’s cousins, and several board members had relationships with Musk through previous investments or family.
When investors sued, Tesla’s board quickly settled, but Musk insisted on going to trial, and it has been going on for years.
The trial happened last July, but Vice Chancellor Joseph Slights of Delaware’s Court of Chancery has only today released his ruling and sided mostly with Musk.
The judge wrote in his opinion:
The preponderance of the evidence reveals that Tesla paid a fair price — SolarCity was, at a minimum, worth what Tesla paid for it, and the acquisition otherwise was highly beneficial to Tesla
Tesla did benefit from the acquisition of SolarCity – primarily for the deployment of its energy storage systems, especially the Powerwall.
While the judge determined that Musk didn’t push the deal to enrich himself, he did say that the CEO, who was supposed to recuse himself when Tesla’s board was discussing the deal, was more involved than he should have been.
Regardless, the decision could put an end to six years of legal drama unless the investors, mainly union pension funds and asset managers, decide to appeal.
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Author: Fred Lambert