According to recent reports, Delaware’s Supreme Court has upheld the trial court’s decision, stating that Tesla Inc (NASDAQ: TSLA) CEO Elon Musk did not exert pressure on the company to overpay for Solar City back in 2016. This ruling brings an end to the prolonged litigation surrounding the $2.6 billion deal.
The court dismissed arguments from a group of Tesla shareholders who claimed that former vice chancellor Joseph Slights had made an error in declaring the acquisition of SolarCity in 2016 as “entirely fair.” Although the court acknowledged that the process by which the board of directors negotiated and recommended the deal to shareholders was not flawless, it ultimately concluded that the fairness of the acquisition remained intact, as reported by AP.
According to Reuters, shareholders contended that Musk exerted pressure on Tesla’s board to approve the agreement with financially troubled SolarCity. At that time, Musk held approximately 22% of Tesla’s common stock and served as both the chairman of SolarCity’s board and its largest stockholder.
The shareholders sought to compel Musk to relinquish the Tesla stock he acquired through the acquisition, which was valued at $13 billion at a certain stage.
According to the AP report, the justices affirmed that the conclusions made by Slights, which were unopposed by the shareholders, provide evidence that the overall process of the deal was conducted fairly. Justice Karen Valihura stated in the court’s 106-page opinion, “After thoroughly reviewing the extensive trial record, we are convinced that the trial court’s decision is backed by the evidence and that no reversible error was made in applying the entire fairness test.”
