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Elon Musk, CEO of Tesla Inc., arrives in court during the SolarCity trial in Wilmington, Delaware, United States, Tuesday, July 13, 2021.
Al Drago | Bloomberg | Getty Images
WILMINGTON, Del. – Tesla CEO Elon Musk returned to court for a second day on Tuesday to defend his company’s acquisition of SolarCity for $ 2.6 billion. But the court was forced to take an unexpected break after someone in the room threw up with Musk having 15 minutes left to testify.
Shareholders sued Musk, alleging that Tesla’s acquisition of the solar power installer amounted to a bailout and a deal struck by Musk, who was concurrently chairman of the board of the two companies. Shareholders also allege that Musk controlled Tesla’s board of directors, even though he appeared to recuse himself from some negotiations regarding SolarCity.
Right after questioning began, plaintiffs attorney Randy Baron portrayed an image that Musk repeatedly went behind the backs of the board to strike a deal between the two companies. Musk, meanwhile, insisted that all communications he had around the deal prior to the board discussion was meant to give the board a full picture.
“It’s part of the board process, making sure the board has accurate information,” said Musk, once again wearing a black suit, white button-down shirt and a black tie.
Musk also denied Baron’s claim that he set the price for Tesla to acquire the SolarCity. Baron pointed to notes taken by a financial adviser which showed Musk had suggested that the board offer $ 28.50 per share for the company. The board then opted for a range of $ 26.50 to $ 28.50. Musk denied setting the range because he suggested what he considered a standard rate, and the board suggested a range, which he did not.
The court took an unexpected break just after 10:30 a.m. ET after a participant vomited in the courtroom. Court officials said it would take up to two hours to clean the courtroom and resume the hearing.
A typically confrontational Musk didn’t answer lawyers’ questions in a single day in Delaware Court of Chancellery on Monday during his roughly six hours on the stand. The trial is expected to last two weeks. Depending on how long the Tesla CEO takes to complete his testimony on Tuesday, his brother and fellow Tesla board member Kimbal Musk could appear in court later in the afternoon.
If Elon Musk loses the case, he could have to pay more than $ 2 billion. In this case, known as a shareholder derivative action, the lawsuit is filed by investors on behalf of a company rather than by individuals or funds. If the plaintiffs win, the profits can go to Tesla and not to the stakeholders who brought the lawsuit.
Musk repeatedly denied on Monday that he pressured the board of directors to complete the deal. He added that SolarCity would have been able to raise funds on its own and that the deal did not amount to a bailout. Musk said the merger allowed Tesla to combine its battery business with Solar City’s solar power generation.
The court also saw a confrontational Musk this week, with growing tensions between the CEO and the plaintiffs’ attorney. Baron showed snippets of Musk’s 2019 deposition, in which Musk repeatedly called the lawsuit a waste of time and said Baron was a “shameful person.”
Baron, discussing Musk’s conduct, asked if he was “drifting” in his testimony for any reason and said the conduct was “not in Tesla’s best interests or for the purpose of achieve something”.
“I think you’re a bad human being,” Musk retorted. He said Baron was “framed by criminals, then continued to be framed by criminals”.
“That’s why I don’t respect you,” Musk said. “I have great respect for the court, but not for you, sir.
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