A Delaware court has ruled in favor of Elon Musk in a class-action complaint filed by Tesla shareholders accusing him of pressuring the electric car company’s board of directors to purchase SolarCity in 2016. According to a January statement from the plaintiff’s attorney, Randy Baron, the shareholders claim that Tesla’s $2.6 billion all-stock SolarCity transaction amounted to “a rescue from financial trouble, a bailout, organized by Elon Musk.” Despite finding that Musk “was more involved in the process than a conflicted fiduciary should be,” the court finally decided in favor of the “technoking” on all grounds. There is still time for shareholders to file an appeal.
Musk’s ties to Solar City were extensive at the time of the purchase. Musk’s first cousins, Lyndon and Peter Rive, co-founded and co-led the unprofitable solar energy company Solar City, and Musk was the company’s largest shareholder and chairman. Vice Chancellor Joseph Slights’ conclusion stated, “[The] Tesla Board substantially reviewed the Acquisition, and Elon did not stand in its way.” “Equally, if not more importantly, the evidence shows that Tesla paid a fair price – SolarCity was, at the very least, worth what Tesla paid for it,” Slights noted.
The decision is clearly in Musk’s favor, but the court rejected to order the shareholders to pay his legal bills. “Had he merely followed the underlying rules of sound corporate governance in conflict transactions,” Slights found, the Tesla CEO and Twitter suitor “likely might have avoided” the dispute in the first place.
Elon Musk, the CEO of Tesla, is known for using Twitter to tease out different thoughts he has about his business interests, cryptocurrencies, politics, and life in general, but it appears like one of his largest musings is coming to fruition today. Musk has accepted Twitter’s offer to buy the publicly traded firm for $54.20 a share, valuing the social media network at $44 billion. Twitter published a press release shortly after word surfaced that trade had been paused, stating that it had accepted Musk’s offer to take the social network private.
Twitter’s Independent Board Chair Bret Taylor stated of the purchase, “The Twitter Board executed a careful and extensive process to analyze Elon’s bid with a deliberate focus on value, predictability, and finance.” “We think the proposed deal would provide a significant cash premium to Twitter’s investors, and we believe it is the best way ahead for Twitter’s owners.” Musk reiterated in the press release that “free speech” is critical to Twitter’s future, despite the fact that most of his suggestions for improving the social network, such as adding new products, combating spam, and opening up its algorithms, were already in the works before his dramatic intervention.