- Title: Elon Musk arrives for trial over Tesla-SolarCity deal
- Date: 13th July 2021
- Summary: WILMINGTON, DELAWARE, UNITED STATES (JULY 13, 2021) (REUTERS) GATE OPENING TO ALLOW TESLA VEHICLE CARRYING TESLA CEO ELON MUSK TO ENTER VEHICLE PARKING AND TWO PEOPLE GETTING OUT MUSK GETTING OUT OF VEHICLE AND WAVING BEFORE WALKING INTO COURT
- Embargoed: 27th July 2021 14:18
- Keywords: Elon Musk SolarCity Tesla court electric vehicle shareholders trial
- Location: WILMINGTON, DELAWARE, UNITED STATES
- City: WILMINGTON, DELAWARE, UNITED STATES
- Country: USA
- Topics: Company News Markets,Economic Events,United States
- Reuters ID: LVA001ELODGEF
- Aspect Ratio: 16:9
- Story Text:Elon Musk returned to court on Tuesday (July 13) where he will take the witness stand for a second day to defend Tesla Inc.'s 2.6 billion U.S. dollar acquisition of SolarCity in 2016, a deal that shareholders say benefited the CEO at the electric vehicle maker's expense.
The lawsuit by union pension funds and asset managers alleges Musk strong-armed the board of directors into using Tesla's assets to rescue SolarCity from potential bankruptcy and never disclosed the dire finances of the solar panel maker.
Musk at the time owned a 22% stake in both Tesla and SolarCity, which was founded by his cousins. The Tesla shareholders want Musk to be ordered to return the value of the deal to Tesla.
The celebrity chief executive spent about six hours on the stand on Monday (July 12), focused mostly on describing his role in the negotiation process for SolarCity and its financial health.
The two-week trial in the Court of Chancery in Wilmington, Delaware, is being overseen by Vice Chancellor Joseph Slights, who will decide the outcome in a written opinion, likely months after the trial ends.
Central to the case are claims that despite owning only 22% of Tesla, Musk was a controlling shareholder due to his ties to board members and domineering style. If plaintiffs can prove this, it increases the likelihood that the court will conclude the deal was unfair to shareholders.
On Monday, Musk insisted the Tesla board handled the SolarCity deal and said that he was not part of the committee that negotiated the terms.
Musk said he did not set pay for directors or have the ability to fire or hire them. He also said that because he owned the same percentage of stock in both companies and there was no cash involved in the deal, he didn't benefit. He said the merger was aimed at combining Tesla's battery business with SolarCity's sustainable energy generation.
Legal experts said the judge will be looking for evidence that Musk threatened board members or that directors felt they could not stand up to him. Board members and others involved in the 2016 deal, including Musk's younger brother Kimbal, will testify beginning as soon as Tuesday.
(Production: Kevin Fogarty, Don Pessin and Deborah Gembara)
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