Elon Musk, CEO of Tesla Inc., will appear on trial during the SolarCity trial in Wilmington, Delaware, United States, on Tuesday, July 13, 2021.
Al Drago | Bloomberg | Getty Images
WILMINGTON, Delaware – Elon Musk, CEO of Tesla, finished his testimony in the Delaware court Tuesday afternoon after spending around 9 hours judging his company’s acquisition of SolarCity for $ 2.6 billion in 2016 defend.
Shareholders sued Musk, claiming that Tesla’s acquisition of the solar energy installer was a bailout that Musk, who was also the CEO of both companies, pushed through. Shareholders also claim that Musk controlled Tesla’s board of directors, despite appearing to have pulled out of some deal negotiations regarding SolarCity.
If Musk loses the lawsuit, he may have to pay more than $ 2 billion. In this case, known as a shareholder derivatives lawsuit, the lawsuit is brought by investors on behalf of a company and not by individuals or funds. If the plaintiffs win, the proceeds can go to Tesla, not the parties who filed the lawsuit.
Shortly after the questioning began on Tuesday, plaintiffs’ attorney Randy Baron attempted to paint a picture of Musk repeatedly going behind the back of the board of directors to spark a deal between the two companies. Musk, meanwhile, insisted that all communications he had prior to the board’s discussion of the deal should convey a complete picture.
“This is part of the board process to make sure the board has accurate information,” said Musk, who was again wearing a black suit, white buttoned shirt and black tie.
Musk also denied Baron’s claims that he set the price for Tesla to acquire the SolarCity. Baron pointed to notes from a financial advisor showing that Musk had proposed offering the board of directors $ 28.50 per share for the company. The board later agreed on a range of $ 26.50 to $ 28.50.
Baron finished his cross-examination around 12:45 p.m. Musk’s attorney, Evan Chesler, then redirected the questions, trying to figure out Baron’s question and give management more context.
Vice Chancellor Joseph Slight, who will rule the case, then asked questions about the timing of the transaction and the importance of an integrated solar product.
“As I understand, one of the disputes in the event that the timing of this acquisition didn’t make sense for Tesla,” Slight said, citing issues surrounding the Model X. Musk said the issues at hand that led to the board of directors declined to pursue a SolarCity acquisition in early 2016, were resolved by mid-2016. Musk said this allowed boarding to be comfortable with an acquisition.
The daily routine was changed slightly after he was forced to take an unexpected break after a member of the plaintiffs attorney vomited in the room.
Musk’s brother and Tesla board member Kimbal Musk followed Elon Mus’s statement and went to the booth around 2:40 pm. Kimbal Musk joined Tesla’s board in 2004. He had also invested in SolarCity.
Kimbal Musk denied that his brother controls the Tesla board of directors. He added that Musk was ultimately banned from the SolarCity vote.
“It’s a very healthy board compared to most of the companies I’ve worked on,” he said.
The SolarCity deal could help the world understand Tesla’s strategic vision, said Kimbal Musk, and helped move the company from just producing vehicles.
Tuesday’s testimony came after a typically confrontational Musk spent about six hours on the stand on Monday.
Musk had repeatedly denied having put pressure on the board of directors to carry out the transaction. He added that SolarCity would have been able to raise funds on its own and the deal would not amount to a bailout. Musk said the merger allowed Tesla to combine its battery business with Solar City’s solar power generation.
Tensions between the CEO and the plaintiffs’ attorney were often high. Baron on Monday showed clips of Musk’s 2019 testimony in which Musk repeatedly called the lawsuit a waste of time and said Baron was a “shameful person.”
Speaking of Musk’s behavior, Baron asked if he was “mocking” for any reason in his testimony, saying the behavior was “not for Tesla’s benefit or for an advantage”.
“I think you are a bad person,” Musk replied. He said Baron was “cared for by criminals and then continued to be cared for by criminals”.
“That’s why I don’t respect you,” said Musk. “I have great respect for the court, but not for you, sir.”
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