(Bloomberg) — Tesla Inc.’s $2.6 billion acquisition of SolarCity was just a bailout of the troubled sun-power provider engineered by Elon Musk, a lawyer for investors suing the Tesla chief told a judge.
“At every turn Musk intended the acquisition to be a bailout, and Musk was the most important person to make that happen,” Randall Baron, an attorney for the Tesla shareholders, told Delaware Chancery Court Judge Joseph Slights III in closing arguments on Tuesday.
Slights must decide whether Musk, who served as SolarCity’s chairman and largest shareholder at the time of the 2016 acquisition, improperly stood on both sides of the deal and used his influence with the Tesla board to get the transaction done. Musk’s lawyers argue that the SolarCity acquisition was a “product of fair dealing” that was approved by 85% of Tesla’s shareholders.
Musk is the last Tesla director left in the case after his colleagues agreed to a $60 million settlement of investors’ claims last year. He will have to pay the damages himself if Slights finds he improperly used his influence to push the deal through. He testified during a trial in the case last summer, defending the transaction as a sound one needed to integrate solar power with Tesla’s battery.
Baron on Tuesday told the judge that was a “false narrative” to hide the deal’s true purpose and that Tesla had acquired a “failed company” in a growing market.
“He controlled the process and the board by withholding key information,” Baron said.
The case is In Re Tesla Motors Inc. Stockholders Litigation, No. 12711, Delaware Chancery Court (Wilmington).
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