The Delaware Supreme Court has upheld the fairness of Tesla’s acquisition of SolarCity in a case that dismissed a shareholder lawsuit. The $2.6 billion deal, which saw the solar power company taken over by the electric car manufacturer in 2016, had been challenged by investors who argued that Tesla co-founder Elon Musk had been too closely involved in the negotiations. The Supreme Court disagreed, saying the acquisition had been conducted in “good faith,” with the advice of independent financial and legal advisors, as well as an independent director. The result was that a fair process had led to a fair price, the court found.
Following the announcement on Tuesday, Tesla shares rose by 0.9% to $219.65. The lawsuit had claimed that Musk had been such an integral figure in the efforts to buy SolarCity, which was run by his cousins, that he could not be considered an independent actor representing the interests of all shareholders.
The court’s decision was welcome news for Tesla, which had faced years of criticism from investors and analysts over its links to SolarCity, which had built a reputation as a leading installer of solar panels for residential customers. Tesla’s own solar business had struggled to perform as well in the burgeoning market, and the acquisition was seen by some as a move to bail out SolarCity. Musk had argued at the time that the deal was vital for Tesla’s efforts to create an integrated, sustainable energy company, capable of meeting the needs of a global population expected to reach 10 billion by 2050.