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Elon Musk wins shareholder lawsuit over Tesla’s $2.6 billion SolarCity acquisition

Elon Musk, chief executive officer of Tesla Inc., arrives at court during the SolarCity trial in Wilmington, Delaware, U.S., on Tuesday, July 13, 2021.
Al Drago | Bloomberg | Getty Images

Elon Musk won a shareholder lawsuit over Tesla‘s $2.6 billion acquisition of SolarCity, a Delaware chancery court judge ruled.

Tesla shareholders alleged the company’s acquisition of the solar installer amounted to a bailout, pushed through by Musk who sat on both company boards at the time. The shareholders also alleged that Musk controlled the board of Tesla, even though he appeared to recuse himself from some deal negotiations concerning SolarCity.

He had he lost, Musk could have had to pay upwards of $2 billion.

Musk denied that he placed any pressure on the Tesla board to go through with the transaction. He also said the merger allowed Tesla to combine its battery business with Solar City’s solar photovoltaics installations.

During the trial, Musk said the SolarCity deal was part of his “master plan,” which he had written in 2006 and was meant to accelerate the advent of sustainable energy.

The case was a shareholder derivative action, a suit filed by investors on behalf of a corporation, rather than individuals or funds. If the plaintiffs had won, proceeds would have gone to Tesla and not to the stakeholders who brought the suit.

Investors were skeptical of the deal when Tesla proposed it in June 2016, with the stock plunging more than 10% on the announcement.

This is breaking news. Please check back for updates.

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