Tesla shares have shrugged off concerns surrounding a class-action shareholder lawsuit against CEO Elon Musk, rising nearly 4% in Monday’s trading session.
The suit alleges the billionaire pressured Tesla’s board to approve the $2.6 billion acquisition of Solar City in 2016, which plaintiffs argue was rife with conflicts of interest and failed to produce the profits Musk had promised.Founded in 2006 by Musk’s cousins, Lyndon and Peter Rive, Solar City became the largest residential solar installer.
According to records from Delaware’s Court of Chancery, Solar City posted revenue of $730 million in 2016 but a $820 million net loss that same year. At the time of the all-stock purchase, Solar City had racked up more than $1.5 billion of debt and Musk was the company’s largest stakeholder and its chairman. He also held an approximately 22% stake in Tesla.Musk took the stand in Delaware court on Monday to defend the acquisition, denying any conflict of interest. At times, Musk became testy in his exchanges with opposing attorneys, including one where he accused them of asking “really tricky and deceptive” questions.
While explaining that the acquisition was part of his “master plan” dating back to 2006, Musk argued in his testimony that the deal was handled by an independent director and that he received no financial gain from the acquisition.
“Since it was a stock-for-stock transaction and I owned almost exactly the same percentage of both there was no financial gain,” Musk said.
