Musk to testify in defence of Tesla's $2.6 bln deal for SolarCity
Tesla CEO Elon Musk to testify in defence of the electric vehicle manufacturer's 2016 acquisition of SolarCity. This comes in the wake of a lawsuit filed by the shareholders of Tesla Inc seeking to recoup the $2.6 billion that the EV company spent on the SolarCity deal.
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The lawsuit was filed by union pension funds and asset managers. They alleged that Musk influenced Tesla's board to buy SolarCity despite it being a wreak deal for the company.
Musk will testify defending the deal in a two-week trial in Wilmington in Delaware before Vice Chancellor Joseph Slights, said Reuters. The trial will decide whether the SolarCity deal was justified to Tesla shareholders or not.
Interestingly, the lawsuit pointed finger at Tesla CEO because he owned a 22% stake in SolarCity that was founded by his cousins. The shareholders appealed to the court to order Elon Musk to repay the amount to Tesla, which was spent to purchase SolarCity. They also accused Musk of dominating deal discussions and pushing the company to pay more to SolarCity. He had a 22% stake in Tesla during the deal, which was nowhere near a controlling stake in the company.
The celebrity CEO on the other hand has argued that the Tesla-SolarCity deal was fair for the shareholders. He also said that the deal was negotiated by the Tesla board without any influence from him. During the trial, the judge is expected to look for evidence if Musk had strong-armed the Tesla board members or not.
Other Tesla directors settled the allegations from this same lawsuit in 2020 for an amount of $60 million. They paid this by insurance, without admitting fault.