Iran Press/ America: Shareholders in the suit allege the 2016 deal amounted to a SolarCity bailout, suing Musk and his fellow board members. While the Tesla board members settled in late 2020 for $60 million, Musk opted to take the fight to court.
Shareholders sued Musk, alleging that Tesla’s acquisition of the solar energy installer amounted to a bailout and a deal pushed through by Musk, who was a chairman of the board at both businesses concurrently. The shareholders also allege that Musk controlled the board of Tesla, even though he appeared to recuse himself from some deal negotiations concerning SolarCity.
The lawsuit by union pension funds and asset managers alleges the celebrity chief executive strong-armed Tesla’s board to buy SolarCity, just as it was about to run out of cash. Musk owned a 22% stake in the company, which his cousins founded. At the time of the purchase, he also owned about a 22% stake in Tesla.
Shareholders asked the court to order one of the world’s richest people to repay Tesla what it spent on the deal, which would be one of the largest judgments ever against an individual. The judge could award a much lower amount of damages.
“Since it was a stock-for-stock transaction and I owned almost exactly the same percentage of both [companies] there was no financial gain,” he said, responding to his attorney.
Musk’s testimony kicked off a two-week trial in Wilmington, Delaware, before Vice-Chancellor Joseph Slights, who will decide whether the deal was fair to Tesla stockholders.
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