Tesla shareholders want Elon Musk to pay $13 billion for role in acquisition of SolarCity
Tesla shareholders have urged a judge on Tuesday to charge Elon Musk $13 billion for his role in the company’s acquisition of SolarCity, according to Reuters.
SolarCity is a company that installs solar panels for residential, commercial and industrial customers. It was acquired by Tesla in 2016 after Elon Musk presented it to the board, but plaintiffs are claiming he misrepresented the financial health of SolarCity.
At the time of the all-stock purchase, Musk was SolarCity’s largest stakeholder and its chairman. In what the plaintiffs call a clear conflict of interest, SolarCity had been founded by Musk and two of his cousins, Lyndon Rive and Peter Rive.
In a series of lawsuits, Tesla directors were sued for supposedly bowing to Musk’s influence and abandoning their financial obligations by agreeing to the deal.
In August 2020, a judge approved a $60 million settlement that resolved claims made against all the directors on Tesla’s board except Musk without any admission of fault. That left Musk, who refused to settle, as the sole remaining defendant.
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Tesla’s website argues that Tesla and SolarCity share the goal of building a sustainable source of power in the future and that the proliferation of battery-stored power can build the infrastructure sources necessary for Tesla vehicles.
The website also lists goals for the SolarCity acquisition, saying it would contribute over a billion dollars of revenue in 2017 and add over $500 million to Tesla’s balance sheet over the next three years.
However, after the acquisition, Tesla’s fourth-quarter earnings in 2017 showed a 43% drop in solar deployments from before the acquisition, according to CNBC. Plus, SolarCity, once the top seller in the solar panel space before the acquisition, lost its lead in 2018, CNBC reports.
Musk’s lawyer, Vanessa Lavely pointed out to the judge on Tuesday that it was unlikely Musk had such power over Tesla’s board of directors given that he doesn’t have any control over their positions on the board or their compensation, Bloomberg reports.