Musk was sued by shareholders: he was asked to return $13 billion for the forced acquisition of SolarCity


On January 19, Beijing time, according to foreign media reports, some shareholders of Tesla took CEO Elon Musk to court, urging the judge to rule that Elon Musk coerced the company’s board of directors to reach a deal to acquire SolarCity in 2016 and asked it to repay $13 billion.
The plaintiff’s lawyer said at the hearing that the key point of this lawsuit is whether Musk’s instigation of the board of directors to acquire SolarCity is a carefully planned play, and its fundamental purpose is to alleviate SolarCity’s financial crisis. The plaintiff believes that musk put pressure on the board of directors to force them to agree to buy SolarCity, which is short of funds, and musk is the major shareholder of SolarCity.
Tesla bought SolarCity for $2.6 billion in 2016. The transaction was completed in the form of shares. Since then, Tesla’s share price has soared. The plaintiff wants the court to order musk to return the Tesla shares he obtained from the transaction, which is about $13 billion at the current price.
Musk explained that the transaction is part of a long-term plan to build a vertically integrated company. At the hearing, Musk’s representative lawyer Evan Chesler said that the transaction was not to rescue SolarCity. At that time, it was still far from bankruptcy, and its financial situation was similar to that of many high growth technology companies. Meanwhile, musk said in court documents that such a large compensation is at least five times that of similar litigation. If the money is really to be returned, it is “unexpected wealth” for the plaintiff.
The plaintiff’s lawyer believed that musk should not get the corresponding shares from the beginning, which was an unexpected fortune for musk. When acquiring SolarCity, Tesla was preparing to launch model 3. Shareholders believed that the transaction would distract the company and put more burden on Tesla because SolarCity’s financial situation was very poor.