Elon Musk (right) and cousin Lyndon Rive. Image: Tesla/Solarcity.
A judge has approved a US$60 million settlement for Tesla shareholders who challenged the company’s acquisition of installer SolarCity.
But the settlement only applies to Tesla’s board of directors and not founder and chief executive Elon Musk, with his role in the deal subject to a separate case delayed until next year.
Yesterday Judge Slights of the Court of Chancery of the State of Delaware approved a US$60 million settlement for various shareholders of the clean energy firm who challenged the company’s US$2.6 billion acquisition of SolarCity in 2016.
Shareholders including the City of Riviera Beach Fund originally filed a civil action in September 2016, claiming they were defrauded when Tesla struck a deal to acquire the solar installation business co-founded by Musk, which was at the time owned and operated by Lyndon Rive, a cousin of Musk’s.
Documents filed by the court last year showed that shareholders claimed the transaction to be “so one sided that no business person of ordinary, sound judgement could conclude that the corporation has received adequate consideration”, a claim Tesla disputed vehemently.
Judge Slights approved the settlement during a virtual briefing held yesterday while also ordering Tesla to pay US$17 million to the shareholders' lawyers in fees.
Musk’s separate case was originally slated to be heard in March but was delayed a year following the onset of the novel coronavirus pandemic.