Elon Musk Defends Tesla's $2.6-Billion SolarCity Deal in US Shareholder Trial

Musk said that he reportedly didn’t inappropriately pressure fellow board members to greenlight the transaction.

Elon Musk Defends Tesla's $2.6-Billion SolarCity Deal in US Shareholder Trial

Elon Musk told the court that buying SolarCity was part of his "master plan"

Highlights
  • The group of investors includes union pension funds
  • The plaintiffs contend Tesla's board breached their fiduciary duty
  • Plaintiffs reached a $60 million (roughly Rs. 450 crores) settlement

Tesla chief Elon Musk defended the electric car maker's controversial 2016 acquisition of SolarCity Monday at the start of a trial on whether the billionaire put his own interests ahead of investors.

Musk told a Delaware court that he was not enriched by the Tesla-SolarCity deal and that he did not inappropriately pressure fellow board members to greenlight the transaction, according to CNBC.

A group of Tesla shareholders contends that Musk, 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 (roughly Rs. 19,360 crores) deal and harming shareholders, according to a complaint.

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 (roughly Rs. 450 crores) 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.

A key question in the trial is whether Musk, who held 22 percent of Tesla's equity at the time, controlled the transaction, which won approval from Tesla shareholders.

Musk told the court that buying SolarCity was part of his "master plan," according to CNBC.

"Since it was a stock-for-stock transaction and I owned almost the same percentage of both there was no financial gain," Musk said. 

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."

Dan Ives, analyst at Wedbush Securities, said Wall Street will be watching the trial "very closely to see the outcome for Musk and the corporate governance."

The SolarCity deal has been a "black eye" for Musk and Tesla and a "clear low light" in the company's whirlwind rise, Ives said in a note.


What is the best phone to buy right now? We discussed this on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.
Comments

For the latest tech news and reviews, follow Gadgets 360 on Twitter, Facebook, and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel.

Further reading: Elon Musk, Tesla, SolarCity
Moto G60S Expected Price, Key Specifications Leak, Tipped to Launch Soon

Related Stories

Share on Facebook Tweet Snapchat Share Reddit Comment
 
 

Advertisement

Advertisement

© Copyright Red Pixels Ventures Limited 2021. All rights reserved.
Listen to the latest songs, only on JioSaavn.com