A Delaware court ruled in favor of Musk in a shareholder lawsuit over the SolarCity acquisition.
The company's acquisition of the solar installer was pushed through by Musk who sat on both company boards at the time. The shareholders claimed that Musk was in charge of the board of the company even though he was not involved in the SolarCity deal.
Had he lost, Musk would have had to pay a lot of money. The matter could be appealed to the Delaware Supreme Court.
Vice Chancellor Joseph R. Slights, who decided the case shortly before retiring, sided with Musk, writing that Elon was more involved in the process than a conflicted fiduciary should be. Conflicts among other board members were not completely solved. The Acquisition was thoroughly reviewed by the Board and no one stood in its way.
SolarCity was founded in 2006 by Musk's cousins. Musk was the chairman of the board at both SolarCity andTesla. Musk's company bought tens of millions of dollars worth of solar bonds from SolarCity.
Musk denied that he put pressure on the board to approve the transaction. The merger allowed Solar City to combine its solar photovoltaics installations with the battery business ofTesla.
During the trial, Musk said the SolarCity deal was part of his master plan, which he had written in 2006 and was meant to accelerate the advent of sustainable energy.
A shareholder derivative action is a suit filed by investors on behalf of a corporation. The proceeds of the suit would have gone to the stakeholders who brought it.
The stock plunged more than 10% on the announcement of the deal, which investors were skeptical of.
Emails that were part of the trial show that Musk wrote an e-mail to the CFO of SolarCity saying that he needed to get investors on board with the deal.
SolarCity should be able to solve its liquidity crisis, an LOI with Panasonic to address solar cell production risk, and a joint product demo, Musk wrote.
Musk argued that Solar City would have been able to raise capital even if it hadn't been acquired.
The acquisition of SolarCity byTesla was completed in November of 2016
Musk was only able to get the SolarCity acquisition approved by misrepresenting the financial well-being of SolarCity, according to the lawsuit. They said that due diligence by outside firms was rushed to hide SolarCity's troubles.
Musk unveiled a product that didn't yet function, and shareholders argued that he was trying to convince investors that there was a product close to commercial viability in SolarCity.
As of trial,Tesla continued to rely on other solar companies to manufacture, produce, install and sell parts of its solar products. The synergistic integration that was hoped for byTesla is still a work in progress. The Acquisition has increased the value of the company.
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