The Delaware Supreme Court has upheld a lower court’s ruling that Tesla CEO Elon Musk did not push the electric car maker to overpay when it acquired rooftop solar provider SolarCity in 2016.
The deal, which was worth $2.6 billion, was controversial at the time, with some Tesla shareholders alleging that Musk was trying to bail out his investment in the solar panel company.
The Supreme Court’s ruling noted that while a judge on the Delaware Court of Chancery erred in some segments of his analysis, the overall premise still supported the idea that Tesla had paid a fair price for SolarCity during the deal.
A lawyer representing the union pension funds and asset managers who sued Tesla, Randall Baron, declined to comment on the ruling.
As noted in a Reuters report, the shareholders were appealing a 2022 ruling from Vice Chancellor Joseph Slights, who has since retired. Slights had rejected claims that SolarCity was insolvent when it was acquired by Tesla in the $2.6 billion deal. The shareholders, for their part, argued that Slights had relied on the market price for SolarCity, but that was a factor that was heavily influenced by the company’s selective financial disclosures.
The shareholders also noted that Slights did determine that Musk had influenced the deal. Despite this, the CEO was not held liable at all. Overall, the shareholders who sued are looking to force Elon Musk to return the Tesla stock he acquired when the EV maker acquired SolarCity. The stake was reportedly worth $13 billion at one point.
As per the Delaware Supreme Court, however, the presentation of Slights’ ruling could probably have been done better. Regardless, the overall findings of the case supported his conclusion. These involved the collapse of the shareholders’ argument that SolarCity was insolvent at the time of the deal.
“The trial court’s opinion is replete with factual findings and credibility determinations, and those determinations have not been challenged and decidedly weigh in favor of Musk,” the court noted.
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