Delaware’s Supreme Court has found that Tesla Inc (NASDAQ:TSLA) CEO Elon Musk did not pressure the company into overpaying for Solar City in 2016, upholding a trial court’s decision and ending years of litigation over the $2.6 billion deal, it was reported on Tuesday.
The court rejected arguments from a group of Tesla shareholders that former vice chancellor Joseph Slights erred in finding that Tesla’s deal to acquire SolarCity in 2016 was “entirely fair” — even though the process by which its board of directors negotiated and recommended the deal to shareholders was “far from perfect,” AP reported.
The shareholders had argued that Musk pushed Tesla’s board into agreeing the deal with Solar City, which was insolvent at the time. Musk owned about 22% of Tesla’s common stock and was the largest stockholder of SolarCity, as well as chairman of its board of directors.
Shareholders wanted to force Musk to return the Tesla stock he received in the takeover, which at one point was worth $13 billion, according to Reuters.
The justices concluded that the findings by Slights, which were not challenged by the shareholders, support the conclusion that the overall deal process was the product of fair dealing.
“We are convinced, after a thorough review of the extensive trial record, that the trial court’s decision is supported by the evidence and that the court committed no reversible error in applying the entire fairness test,” Justice Karen Valihura wrote in the court's 106-page opinion, per the AP report.
Contact the author at stephen.gunnion@proactiveinvestors.com