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Tesla CEO Musk has filed another lawsuit, and the plaintiff is still a shareholder of Tesla.
This week, some Tesla shareholders asked Musk for $13 billion (about 82.6 billion yuan) in connection with Tesla's 2016 acquisition of SolarCity. As a defendant, Musk is also "rigid", and his lawyer refuted the above reasons and requirements.
Musk has been in the dock several times since 2016 over Tesla's acquisition of SolarCity, but he insists that the acquisition has brought shareholders a lot of benefits because Tesla's stock price has been rising.
Tesla shareholders took Musk to court
On Tuesday, local time, some Tesla shareholders took Musk to court, accusing Musk of putting pressure on the board of directors to facilitate the 2016 acquisition of SolarCity, and urging the judge to make a ruling requiring Musk to return Tesla shares obtained as a result of the transaction, which is about $13 billion (about 82.6 billion yuan) at the current price.
Judging from the demands of the lawyers representing both sides, the key to this case is whether Musk forced Tesla's board to approve SolarCity's acquisition transaction.
Shareholder attorney Randy Barron believes that the acquisition of SolarCity is a carefully planned transaction by Musk to alleviate SolarCity's financial crisis, and Musk has forced Tesla's board to approve the transaction. In addition, tesla was preparing to launch a Model 3 car at the time, and shareholders believed that the transaction would distract the company and put more burden on Tesla.
Elvin Chesler, Musk's lawyer, said the deal was not meant to "save" SolarCity, which, like many high-growth tech companies, was far from bankrupt. The deal is part of a long-term plan and "SolarCity brings tremendous long-term value."
Chesler argued that shareholders were "ridiculous" to ask for $13 billion, ignoring Tesla's unprecedented success in 5 years. He said Musk had no right to fire the directors and could not decide on their salaries, and he himself avoided price negotiations for the deal to buy SolarCity.
Musk said in court filings that the $13 billion in damages was a windfall for the plaintiffs. The plaintiffs argued that the profit from the acquisition was a windfall for Musk.
It is expected that if the plaintiffs can prove Musk's pressure, the likelihood that the court will find that the transaction was unfair to shareholders will increase.
Tesla's acquisition of SolarCity
Questioned many times
In fact, this is not the first time tesla shareholders have questioned the above-mentioned merger transaction.
In November 2016, Tesla spent $2.6 billion to acquire SolarCity in order to build its own clean energy empire. At the time, Musk saw the acquisition as a "no-brainer" decision, and he expected that the acquisition of SolarCity would transform Tesla into a vertically integrated energy company that would provide customers with end-to-end clean energy products, including solar panels, home energy storage devices and electric vehicles.
But for Tesla, it's a risky deal. At the time, Tesla executives were worried that it would be a heavy task to integrate SolarCity and prepare for the launch of the Model 3. Analysts at Bank of America Merrill Lynch are also not optimistic about the acquisition, and the expected merger has made the company's earnings and cash flow more elusive.
Subsequently, many Tesla major shareholders, including some pension funds, believed that the deal to buy SolarCity should not happen. Shareholders accused Tesla of misvaluing solarCity's deal, providing flawed analysis and misleading investors.
Musk argued that he was only involved in some of the discussions about Tesla's acquisition of SolarCity, but did not participate in the board vote approving the acquisition, noting in court documents that the acquisition of SolarCity was a huge success for Tesla shareholders, and that the fact that the stock price rose showed that the deal was not only fair, but also benefited all shareholders.
Tesla's solar business has had mixed prospects
So, how did Tesla's solar business perform after its acquisition of SolarCity? The answer may be mixed.
According to the third quarter report of 2021, Tesla's solar equipment installed reached 83 MW, an increase of 46% year-on-year. Compared to pre-acquisition SolarCity quarterly installations, 83 MW of installations are still down nearly half.
Tesla said it is further optimizing costs, especially installation costs, to improve profitability in the energy sector. Musk has publicly stated many times that solar roofs will become another core business of Tesla after electric vehicles.
However, Tesla's risk events related to the solar business have continued in recent years. Walmart's previous indictment against Tesla said Tesla had "extensive, systematic" negligence in its solar panel product quality control, resulting in a series of fire accidents.
According to authoritative foreign media reports, Tesla solar panels have major fire hazards, and the US securities regulator has launched an investigation into Tesla.
Edit: Lin Jian
Proofreader: Sun Jiehua
Editor: Zhang Dawei
Producer: He Yongxin
Editor-in-charge: Shao Ziyi
Producer: Pu Hongyi
Issued: Pan Linqing