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Monday, Jul 26, 2021

Elon Musk Heading To US Court To Defend Tesla's SolarCity Deal

Elon Musk Heading To US Court To Defend Tesla's SolarCity Deal

A group of Tesla shareholders contends that Elon Musk "poisoned" Tesla's ability to fairly evaluate the purchase, wasting corporate assets in the $2.6 billion deal and harming shareholders, according to a complaint.
Tesla chief Elon Musk is expected in court this week to defend the electric car maker's controversial 2016 acquisition of SolarCity, in a shareholder trial that begins Monday.

A group of Tesla shareholders contends that the multibillionaire, who was chairman of both Tesla and SolarCity at the time of the transaction, "poisoned" Tesla's ability to fairly evaluate the purchase, wasting corporate assets in the $2.6 billion deal and harming shareholders, according to a complaint.

The case will be heard and ruled on by a judge in a Delaware court.

Musk is expected to testify during the two-week trial as early as Monday, US media reported.

The group of investors, which includes union pension funds and other institutional investors, argues that SolarCity was a failing enterprise that faced "likely bankruptcy" were it not for the actions of Musk and other Tesla board members, who also had large equity stakes in SolarCity.

The plaintiffs contend Tesla's board breached their fiduciary duty to Tesla shareholders. They are seeking unspecified monetary relief in the complaint.

Plaintiffs have already reached a $60 million settlement with other Tesla directors originally named in the complaint, with the payment coming from insurance. This group, which included Kimbal Musk, Elon Musk's brother, did not admit fault.

Concerning the case Tesla said in a securities filing that "we believe that claims challenging the SolarCity acquisition are without merit and intend to defend against them vigorously."

Musk contends that the SolarCity deal made Tesla the "world's only vertically integrated sustainable energy company."
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