A Delaware judge decided on Wednesday that Tesla Inc (TSLA.O) Chief Executive Officer Elon Musk did not unjustly enrich himself when he led the electric vehicle company to acquire SolarCity Corp in 2016, where Musk was chairman and the largest shareholder.
Tesla shareholders accused Musk of pressuring the company’s board of directors to buy SolarCity, a struggling rooftop solar panel manufacturer, in order to save his investment, and wanted up to $13 billion in damages.
The decision comes as Musk prepares to use his immense wealth to buy Twitter Inc (TWTR.N), which accepted his $44 billion offer on Monday. It also came after a second judge dismissed Musk’s request to halt oversight of his Tesla tweets earlier in the day.
“The preponderance of the evidence reveals that Tesla paid a fair price — SolarCity was, at a minimum, worth what Tesla paid for it, and the acquisition otherwise was highly beneficial to Tesla,” said the opinion by Vice Chancellor Joseph Slights of Delaware’s Court of Chancery.
The ruling could be appealed and a lawyer for the shareholders said he was evaluating prospective next stages.
“The case is about loyalty. The court’s decision acknowledges that Elon Musk was conflicted and there were flaws in the process,” claimed Randall Baron, the attorney for the plaintiffs.
Neither Tesla nor Musk responded right away. Musk was more involved than he should have been, according to Slights, but a reasonable price for SolarCity outweighed concerns that the sale rewarded Musk unfairly.
The decision came after a 10-day trial in July, during which Musk testified for nearly two days.
Musk allegedly hijacked Tesla’s SolarCity negotiations despite publicly claiming to be “totally recused,” according to union pension funds and asset managers.
Musk was involved in board discussions of the purchase on multiple occasions, according to Slights, but there were also times when the board stood up to Musk and refused to follow his demands, such as the timing of the deal.
In 2016, the all-stock acquisition was valued at $2.6 billion.
Tesla’s stock price has since risen, boosting the value of what Musk earned from the SolarCity acquisition, and thus the plaintiffs’ damages.
Musk, the world’s richest man with a value of roughly $265.6 billion, owned about 22% of both companies at the time, according to Forbes.
