Elon Musk Testifies Over Tesla’s $2.6 Billion Acquisition Of SolarCity
On Monday, Tesla CEO Elon Musk defended the electric car manufacturer's controversial 2016 acquisition of SolarCity against a lawsuit by shareholders, who claim the deal enriched Musk and his family more than it enriched Tesla.
Musk has denied allegations that Tesla’s acquisition of SolarCity was a bailout. He claims that as it was a stock-for-stock transaction, he owned nearly exactly equal percentages of each company and, consequently, there was no financial gain. However, if the shareholders win their case, then Musk may have to pay upwards of $2 billion from his personal wealth.
The Tesla founder’s testimony began a two-week trial in Wilmington, Delaware, before Vice-Chancellor Joseph Slights. The Vice-Chancellor will decide whether the deal was fair to Tesla’s shareholders. The lawsuit, launched by union pension funds and asset managers, claims that Musk intimidated Tesla’s board to acquire SolarCity just as the company was due to run out of cash. Musk had a 22% stake in SolarCity, which was founded by his relatives. At the time of the purchase, Musk also had a 22% stake in Tesla.
Tesla shareholders have asked the court to order Musk to repay the company what was spent on the deal. If the shareholders win their case, it could be one of the largest ever judgements against an individual.