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Elon Musk testifies to defend $2.6Bn SolarCity deal

Tesla CEO Elon Musk doesn’t have an easy life. This can be seen by the fact that he stepped forward to testify at the Delaware Court of Chancery on Monday. Testify for what, you ask? Well, it’s for a $2.5 billion deal from 2016, when Tesla had acquired solar panel-maker SolarCity, after a lawsuit claims that the acquisition came with its fair share of conflicts of interest, did not care about the weaknesses at SolarCity, and overall failed to live up to the profits that Musk had once promised.

Dark Times for the SolarCity Merger

The suit, which actually comprises seven separate shareholder lawsuits merged into one, holds that at the time of the complete acquisition, Elon Musk had been the Chairperson and largest stakeholder in the small company, and that Tesla’s directors violated their fiduciary duties when they agreed to his plans to fully take-over the firm, which was struggling to stay alive. These stakeholders include union pension funds and asset managers, who are now demanding back a sum worth $2.6 billion, which had gone into the merger.

Musk’s Defense

Elon Musk

Image Credits: Getty Images

Soon after he was done with his defense, Musk denied that the deal was a bailout of SolarCity. He added that he didn’t really gain anything financially, since the stock-for-stock transaction saw him sell and gain almost the same amounts.

With his testimony, the Tesla boss has kick-started what is the first of a two-week long trial in Wilmington, Delaware. The hearing was presided over by Vice Chancellor Joseph Slights, and he will be the one to decide whether or not the stakeholders at Tesla were treated unfairly during the acquisition of SolarCity.

In his statement, Musk said that for years, he had been counting on the solar panel maker to become one of his company’s gateways ro “sustainable energy”. Back then, he had deemed the deal to be of prime importance to his so-called ” Master Plan, Part Deux”, with which he plans to put transportation in a new direction, through the use of sustainable energy and self-driving electric vehicles.

He also added that during the merger, he had neither had control over the appointment of board members, nor over their compensation, before proceeding to say that they had negotiated the deal totally free of his influence.

However, the judge will be searching for evidence that suggests otherwise. In other words, evidence that the board members were not able to stand up to the CEO.

 

Source: CNBC

 

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