From Bloomberg, March 28:
Tesla Investors Can Move Ahead With SolarCity Deal Lawsuit
Conflicts among Elon Musk, other directors raised questions
Judge finds Musk dominated board consideration of buyout
Tesla Inc. investors can press forward with claims that billionaire founder Elon Musk duped them into backing his $2.6 billion buyout of a solar-energy firm founded by his cousins, another setback in a rough week for the automaker.Here's the court's opinion, we'll be back with more on why this is an uphill climb for the shareholders.
Tesla shareholders challenging the acquisition of SolarCity Corp. produced enough evidence showing the deal may have been flawed by conflicts among Musk and other company directors, a Delaware judge ruled Wednesday. More than 85 percent of the company’s stockholders voted to back the acquistion.
Musk’s electric-car maker is facing a crisis in the wake of a fatal crash involving one of its Model X cars in California earlier this month. Tesla’s shares have fallen on all but five days this month and the company lost its perch to General Motors Co. as the most valuable automaker. The stock declined 7.7 percent Wednesday to $257.78.
The crash, which is under investigation, adds to Musk’s challenges including concerns that the company won’t reach its production targets for the all-important Model 3 sedan. Tesla didn’t say whether the vehicle’s Autopilot system was engaged during the accident.
Tesla said it didn’t agree with the judge’s decision in the investor suit and will be taking appropriate next steps. The company insists the allegations in the complaint are false.
Pension funds that opposed the 2016 SolarCity buyout accused Musk, who owns a 22 percent stake in Tesla, of using his outsize influence and reputation to manipulate the shareholder vote over the buyout.
Critics of the deal called it a bailout for SolarCity and said it raised questions about the Musk-led company’s corporate governance. Tesla added two new independent directors last year after investors complained its board was too closely tied to the chief executive officer....MORE
IN RE TESLA MOTORS, INC. STOCKHOLDER LITIGATION
For some of our thinking over the years here's November 2017's "So, How Was Tesla's Purchase Of SolarCity Not a Fraud? (TSLA; SCTY)".
The stock is down another $13.21 (4.96%) at $252.92.