The class action lawsuit filed against Tesla by a group of shareholders in relation to the firm’s 2016 acquisition of SolarCity has been given the go-ahead to proceed by a judge in Delaware — following a push by Tesla to have the lawsuit thrown out.
To be extra clear here, the class action lawsuit is actually directed at Tesla CEO Elon Musk and the company’s board of directors, not directly at the firm itself.
The idea behind the lawsuit is reportedly that the firm’s leadership breached their responsibilities to shareholders by pursuing the acquisition. Tesla execs have of course come out in response and argued that the acquisition provides the firm with product and sales synergies that wouldn’t exist otherwise.
The Tesla solar roof products, for instance, are a direct result of the acquisition — and arguably represent a good add-on sales opportunity for people already purchasing home or commercial energy storage systems from the company.
In my opinion, for what it’s worth, there do seem to be substantial sales synergies possible through the offering of combined plug-in electric vehicles + home energy storage systems + home solar energy systems.
Poll CleanTechnica readers before the acquisition.
Reuters provides more information: “Tesla bought solar panel installer SolarCity for $2.6 billion in an all-stock deal in 2016. Musk was then biggest shareholder in both Tesla and SolarCity, and his SolarCity shares were converted to $500 million of Tesla shares. It is ‘conceivable that Musk, as a controlling stockholder, controlled the Tesla board’ during the SolarCity deal, the judge said.”
Speaking to Reuters, a spokesperson for Tesla stated: “We do not agree with the decision and will be taking appropriate next steps. … It’s important to emphasize that this was a motion to dismiss in which the court was required to assume as true all of the allegations that are made in the complaint.”
Just to be clear, in case you missed this information back then, Elon Musk and other board members with ties to both SolarCity and Tesla did recuse themselves from the acquisition vote. The lawsuit seems to claim that even despite that, Elon Musk and others on the board had too much influence over the vote.
We’ll keep you posted on developments as the lawsuit moves forward.
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