Tuesday, May 17

Judge rules for Elon Musk in $13 bln lawsuit over Tesla-SolarCity deal


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Tesla Inc Chief Executive Officer Elon Musk did not unjustly enrich himself when he guided the electric vehicle maker in 2016 to acquire SolarCity Corp, where Musk was chairman and the largest shareholder, a Delaware judge ruled on Wednesday.

Tesla shareholders had accused Musk of coercing Tesla’s board into buying SolarCity, a struggling rooftop solar panel maker, to rescue his investment, and had sought up to $13 billion in damages.

The ruling comes as Musk is tapping his vast fortune to acquire Twitter Inc, which accepted his $44 billion offer on Monday.

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“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,” said the opinion by Vice Chancellor Joseph Slights of Delaware’s Court of Chancery.

There was no immediate response from Musk or plaintiffs’ lawyers to a request for comment on the ruling.

Slights said the deal process had its flaws and Musk was more involved than he should have been, but a fair price for SolarCity outweighed claims the deal unjustly enriched Musk.

The ruling follows a 10-day trial in July and may be appealed. Musk testified during the first two days.

Union pension funds and asset managers alleged that Musk commandeered Tesla’s negotiations for SolarCity while publicly claiming to be “fully recused.”

The all-stock deal was valued at $2.6 billion in 2016.

Tesla’s stock price has since soared, inflating the value of what Musk received from the SolarCity purchase and in turn the damages sought by the plaintiffs.

Musk, the world’s richest person with a fortune of around $265.6 billion according to Forbes, had owned about 22% of both companies at the time. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Howard Goller)



financialpost.com

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