Elon Musk has won a shareholder lawsuit over Tesla’s $2.6 billion acquisition of SolarCity, reports CNBC.
On Wednesday, a Delaware court ruled in Musk’s favour, as the lawsuit alleged the Tesla CEO had acquired SolarCity, a transaction akin to a bailout.
SolarCity was founded by Musk’s cousins Peter and Lyndon Rive back in 2006 and back by the Tesla CEO. Musk sat on the board of SolarCity and Tesla at the time and was also its biggest shareholder.
The lawsuit alleged Musk had somehow controlled the Tesla decision to acquire SolarCity, despite recusing himself from some of the negotiations. Tesla acquired SolarCity in 2016.
Vice Chancellor Joseph R. Slights ruled in Musk’s favor, noting, “Elon was more involved in the process than a conflicted fiduciary should be. And conflicts among other Tesla Board members were not completely neutralized. With that said, the Tesla Board meaningfully vetted the Acquisition, and Elon did not stand in its way.”
Allegations put forth by shareholders say Musk put pressure on Tesla to acquire SolarCity. Musk denied the claims, saying the merger would benefit Tesla’s battery business with the latter’s solar installations, as he had described in his ‘Master Plan’ in 2006.
“As of trial, Tesla 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 hoped for is still a work in progress. Despite these challenges, Tesla’s value has massively increased following the Acquisition,” wrote Slights.
If Musk had lost the trial, damages could have been as high as $2 billion. Shareholders were seeking $13 billion in damages.
