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You’re burying the lede here, which is that the Delaware Chancery Court rules that Tesla had paid a fair price for Solar City: https://www.businessinsider.com/e

You’re burying the lede here, which is that the Delaware Chancery Court rules that Tesla had paid a fair price for Solar City: https://www.businessinsider.com/elon-musk-wins-solarcity-tesla-shareholder-lawsuit-2022-4 https://www.businessinsider.com/elon-musk-wins-solarcity-tes...

deleted 2y ago
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marinmania 2y ago
OP mentions the lawsuits did not succeed Its not like the courts are investment banks with an evaluation arm. They are just judging if anything reaches the point where shareholders were legally harmed, which still gives a lot of gray area to the acquiring company.
- rayiner 2y ago
  Lawsuits can fail for lots of reasons without a decision on the merits. It seems relevant that the reason the lawsuit failed is because the court looked at the fairness of the transaction and determined that Tesla paid a fair price.
  - nmca 2y ago
    This whole thread is true consistent statements that differ only in emphasis.
    - lcnPylGDnU4H9OF 2y ago
      > differ only in emphasis The commenter you are responding to is explicitly intending to place more emphasis on the reason why the lawsuit failed. That is why they used the phrase “burying the lede” in their initial comment.
      - srveale 2y ago
        True!
        glenstein 2y ago
        Hold on, I feel like everyone's missing that theres a real argument here. I think the key point was: >They are just judging if anything reaches the point where shareholders were legally harmed, which still gives a lot of gray area to the acquiring company. This distinguishes the lawsuit failing from the idea that a fair price was paid. The competing contentions are (a) fair price vs (b) unfair but beneath threshold of legally punishable harm.
        michaelmrose 2y ago
        (c) no fair price can possibly be determined but the burden of proof lies with the claimant (d) a court has no idea what a fair price would look like but made a finding of fact based on expert testimony despite being poorly situated to evaluate it
        fedestair 2y ago
        (e) the court in question answers to Delaware which is in the business of siding with any company that incorporates there.
        rayiner 2y ago
        Note that this is a civil suit, so the concept of a “threshold of legally punishable harm” doesn’t apply. There’s no “punishment,” and the plaintiff doesn’t need to meet the high standards (proof beyond a reasonable doubt, etc.) for imposing a punishment. Under Delaware law, there’s two standards for evaluating this kind of claim. When there is no conflict of interest, the court applies the “business judgment rule,” which is similar to what you seem to be thinking—it gives corporate officers wide latitude. But when there is a conflict of interest, the court applies the “entire fairness” standard, which requires both fair dealing and a fair price. And a fair price means what it sounds like—it’s what an objective businessman would consider a fair price under the circumstances. It doesn’t need to be the best price, but it must be within the range of fair. And to establish a fair price, the court relies on evidence from financial valuation experts. It’s a rigorous standard that’s hard to meet.
    - SilasX 2y ago
      That’s generous. One party is stubbornly missing that the Delaware court’s ruling is weak evidence of a proper valuation having been done, but wants to parrot an irrelevant textbook understanding that obfuscates that conclusion.
  - DannyBee 2y ago
    It's worth pointing out (IMHO) given the other comments that it's actually more than that - the fairness standard requires they prove the process was fair as well (IE a fair process that generated a fair price), which the court found they did as well. (As you know, but others may not - this is not always the standard vs the business judgment rule, but is the standard here)
- facile3232 2y ago
  shareholder value maximization, shareholder value maximization über alles I just wanna know where we can find these shareholders and evict them from earth because they're destroying everything.
  - psd1 2y ago
    Sadly, my pension I have no holdings in armaments or instruments of torture, apparently. But that's about the most constraint I can apply, short of self-managing.
    - facile3232 2y ago
      Easily-replaceable with the correctly shaped welfare-state, never fear!
      - jjk166 2y ago
        Those tend to invest in armaments and instruments of torture though
      - psd1 2y ago
        You joke, I think, but I do think a solid welfare state delivers benefits that a mainstream economist would recognise. I fancy the long-term prospects if a country with a safety net higher than one without, all other things being equal. I see more inherent value in the public sector than the private. Unfortunately the private sector has dominated the zeitgeist for decades; a kind of meta-regulatory-capture, if you will. I can't trust that there will be a state pension waiting for me. So I'm in the private sector. Got some bonds in my mix, at least.
        cyberge99 2y ago
        Reduced crime is the most obvious. People will eat. Wether they have to steal it or get it via a social safety net is up to society.
deleted 2y ago
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timewizard 2y ago
"did not act unlawfully" and "paid a fair price" are two entirely different things.
- jfarina 2y ago
  Is that what a corporate lawyer would say?
  - deleted 2y ago
    [deleted]
- rayiner 2y ago
  They are, but in the relevant Delaware law the latter point matters when there is a potential conflict of interest, so the Delaware court ruled on that.
  - timewizard 2y ago
    The "fair price" standard and ruling is about both the process and the price. And the standard is likely not what most people would assume it to be, particularly as stated by the OP, resting on matters such as "was and is the transaction synergistic to Tesla?" It's also notable that the court found several process flaws created by Musk but ultimately determined the Tesla board was independent enough that it was likely fair. Was it actually fair as evaluated by any outsider on first principles? Probably not. Was it criminally unfair? No.
    - rayiner 2y ago
      It wasn’t a criminal case, and plaintiffs didn’t need to meet a high burden of proof. And Delaware’s entire fairness standard is a two-prong test that includes both fair dealing and fair price: https://en.wikipedia.org/wiki/Weinberger_v._UOP,_Inc https://en.wikipedia.org/wiki/Weinberger_v._UOP,_Inc. The court ruled: > Even assuming (without deciding) that Elon was Tesla’s controlling stockholder, the Tesla Board was conflicted, and the vote of the majority Tesla’s minority stockholders approving the Acquisition did not trigger business judgment review, such that entire fairness is the standard of review, the persuasive evidence reveals that the Acquisition was entirely fair… > Equally if not more important, the preponderance of the evidence reveals that Tesla paid a fair price—SolarCity was, at a minimum, worth what Tesla paid for it, and the Acquisition otherwise was highly beneficial to Tesla. Indeed, the Acquisition marked a vital step forward for a company that had for years made clear to the market and its stockholders that it intended to expand from an electric car manufacturer to an alternative energy company. The Court’s verdict, therefore, is for the defense.
croes 2y ago
Doesn’t mean it’s also a fair price this time
- jfoster 2y ago
  Any entity that can afford to invest billions of dollars can probably also afford to litigate if they see fit.
charles_f 2y ago
Arguably we'll never know. A court ruling that it's a fair price isn't the same as letting the market decide
- trod1234 2y ago
  Even if there was a market, any market naturally requires adversarial decision making in the negotiation of a deal to have economic calculation (what we generally view the benefit we derive from a market in the first place). When the same people are making the ask as making the buy, you literally cannot decouple the decision-making in a way that objectively eliminates cooperation. A market cannot exist when the entities involved abandon adversarial decision-making and cooperate. One's priority is always suborned by one or the other.
- deleted 2y ago
  [deleted]
- DannyBee 2y ago
  This is true but it's not as far off as you think. In this case, the court doesn't have to just find it was a fair price, but a fair process as well. That is, the standard the defendants have to meet (not the plaintiffs, the burden is actually on tesla here despite having been sued) is that the transaction was entirely fair to the corporation and shareholders- the process was a fair one, the price was a fair one, etc. I have trouble thinking of a case where you can prove all this[1] but the market would have come up with something different. Almost by definition, if the market would have decided to pay a lower price, either the price or the process was probably not fair. [1] Which again, you have to do affirmatively. You aren't just rebutting plaintiff evidence, the burden is on you to show the fairness
chairmansteve 2y ago
How's Solar City doing now? Not sure the court was capable of that judgement.
- bamboozled 2y ago
  Scandalous ?
- cedws 2y ago
  And what happened to Tesla solar roofs? Haven’t heard about those since like 2020. Who actually has one? And Tesla trucks? And full self-driving? And robotaxis? And the private venture around the moon? It’s like everyone just forgets Musk’s announcements that never get delivered on.
  - thordenmark 2y ago
    Aren't Cyber trucks by Tesla? And FSD is basically here which means robotaxis are basically here. Now there are just regulatory hurdles and the long tail.
    - watwut 2y ago
      "Basically here" and "actually here" tend to be decades apart ... especially in Musks case. Tho, I think another company can be actually capable to make them actually working.
    - ben_w 2y ago
      He made much the same claim 6 years ago: https://www.inverse.com/science/55141-elon-musk-autonomous-driving https://www.inverse.com/science/55141-elon-musk-autonomous-d... """“I feel very confident predicting autonomous robo taxis for Tesla by next year. Not in all jurisdictions, because we won’t have regulatory approval everywhere. But we will have regulatory approval at least at some point next year,” Musk said toward the end of the presentation. “From our standpoint, if you fast forward a year, maybe a year in three months, but next year for sure, we will have over a million robo taxis on the road.”""" - Musk, April 2019
    - 2y ago
eximius 2y ago
[flagged]
- vntok 2y ago
  Pointing out disinformation is a valuable thing to do, and well in the spirit of hacker news.
  - soulofmischief 2y ago
    [flagged]
    - claytongulick 2y ago
      When I read your comment, what I see is "I checked through their comment history. They disagree with my political viewpoint, so I'm going to use the popular talking points from my in-group to attack them." I glanced through your comment history as well, and I'm convinced that you are a lot smarter than that, and can add more to the conversation.
      - deleted 2y ago
        [deleted]
      - throwawaygmbno 2y ago
        Looking through your comment history it seems like you use a thesaurus on a few posts so that you can defend people like him in other posts.
        johnisgood 2y ago
        What about my comment history?!
      - soulofmischief 2y ago
        > popular talking points from my in-group to attack them Pointing out that we're currently being de facto ruled by a circle of wealthy billionaires and millionaires is not a "talking point". This comes across as projection. > I'm convinced that you are a lot smarter than that Thank you. I'm not sure what you're looking for me to add to the conversation however, I just plainly said what I saw, which was them to bat for several oligarchs who are currently making a mockery of our country.
refurb 2y ago
Indeed. Grandparent is not correct, you can’t just assign “whatever” value in self-dealing transactions. The SEC and IRS weren’t born yesterday. It reminds me of people who come up with basic self-dealing transactions with some tax benefit and act like the idea wasn’t around 100 years ago and that regulations aren’t already in place.
deleted 2y ago
[deleted]
MrSkelter 2y ago
Regardless of the faith you have in the courts assessment time has shown the more critical opinion to be true. Solar City was a dead company, none of the promises they made has amounted to anything, they aren’t producing any products or revenue, and the deal has been shown to be self dealing in order to bail out his brother. Where are the solar roof tiles? What’s happened to the tax payer funded factory in NY?

deleted 2y ago

[deleted]

marinmania 2y ago

OP mentions the lawsuits did not succeed Its not like the courts are investment banks with an evaluation arm. They are just judging if anything reaches the point where shareholders were legally harmed, which still gives a lot of gray area to the acquiring company.

rayiner 2y ago
Lawsuits can fail for lots of reasons without a decision on the merits. It seems relevant that the reason the lawsuit failed is because the court looked at the fairness of the transaction and determined that Tesla paid a fair price.
- nmca 2y ago
  This whole thread is true consistent statements that differ only in emphasis.
  - lcnPylGDnU4H9OF 2y ago
    > differ only in emphasis The commenter you are responding to is explicitly intending to place more emphasis on the reason why the lawsuit failed. That is why they used the phrase “burying the lede” in their initial comment.
    - srveale 2y ago
      True!
      - glenstein 2y ago
        Hold on, I feel like everyone's missing that theres a real argument here. I think the key point was: >They are just judging if anything reaches the point where shareholders were legally harmed, which still gives a lot of gray area to the acquiring company. This distinguishes the lawsuit failing from the idea that a fair price was paid. The competing contentions are (a) fair price vs (b) unfair but beneath threshold of legally punishable harm.
        michaelmrose 2y ago
        (c) no fair price can possibly be determined but the burden of proof lies with the claimant (d) a court has no idea what a fair price would look like but made a finding of fact based on expert testimony despite being poorly situated to evaluate it
        fedestair 2y ago
        (e) the court in question answers to Delaware which is in the business of siding with any company that incorporates there.
        rayiner 2y ago
        Note that this is a civil suit, so the concept of a “threshold of legally punishable harm” doesn’t apply. There’s no “punishment,” and the plaintiff doesn’t need to meet the high standards (proof beyond a reasonable doubt, etc.) for imposing a punishment. Under Delaware law, there’s two standards for evaluating this kind of claim. When there is no conflict of interest, the court applies the “business judgment rule,” which is similar to what you seem to be thinking—it gives corporate officers wide latitude. But when there is a conflict of interest, the court applies the “entire fairness” standard, which requires both fair dealing and a fair price. And a fair price means what it sounds like—it’s what an objective businessman would consider a fair price under the circumstances. It doesn’t need to be the best price, but it must be within the range of fair. And to establish a fair price, the court relies on evidence from financial valuation experts. It’s a rigorous standard that’s hard to meet.
  - SilasX 2y ago
    That’s generous. One party is stubbornly missing that the Delaware court’s ruling is weak evidence of a proper valuation having been done, but wants to parrot an irrelevant textbook understanding that obfuscates that conclusion.
- DannyBee 2y ago
  It's worth pointing out (IMHO) given the other comments that it's actually more than that - the fairness standard requires they prove the process was fair as well (IE a fair process that generated a fair price), which the court found they did as well. (As you know, but others may not - this is not always the standard vs the business judgment rule, but is the standard here)
facile3232 2y ago
shareholder value maximization, shareholder value maximization über alles I just wanna know where we can find these shareholders and evict them from earth because they're destroying everything.
- psd1 2y ago
  Sadly, my pension I have no holdings in armaments or instruments of torture, apparently. But that's about the most constraint I can apply, short of self-managing.
  - facile3232 2y ago
    Easily-replaceable with the correctly shaped welfare-state, never fear!
    - jjk166 2y ago
      Those tend to invest in armaments and instruments of torture though
    - psd1 2y ago
      You joke, I think, but I do think a solid welfare state delivers benefits that a mainstream economist would recognise. I fancy the long-term prospects if a country with a safety net higher than one without, all other things being equal. I see more inherent value in the public sector than the private. Unfortunately the private sector has dominated the zeitgeist for decades; a kind of meta-regulatory-capture, if you will. I can't trust that there will be a state pension waiting for me. So I'm in the private sector. Got some bonds in my mix, at least.
      - cyberge99 2y ago
        Reduced crime is the most obvious. People will eat. Wether they have to steal it or get it via a social safety net is up to society.

deleted 2y ago

[deleted]

timewizard 2y ago

"did not act unlawfully" and "paid a fair price" are two entirely different things.

jfarina 2y ago
Is that what a corporate lawyer would say?
- deleted 2y ago
  [deleted]
rayiner 2y ago
They are, but in the relevant Delaware law the latter point matters when there is a potential conflict of interest, so the Delaware court ruled on that.
- timewizard 2y ago
  The "fair price" standard and ruling is about both the process and the price. And the standard is likely not what most people would assume it to be, particularly as stated by the OP, resting on matters such as "was and is the transaction synergistic to Tesla?" It's also notable that the court found several process flaws created by Musk but ultimately determined the Tesla board was independent enough that it was likely fair. Was it actually fair as evaluated by any outsider on first principles? Probably not. Was it criminally unfair? No.
  - rayiner 2y ago
    It wasn’t a criminal case, and plaintiffs didn’t need to meet a high burden of proof. And Delaware’s entire fairness standard is a two-prong test that includes both fair dealing and fair price: https://en.wikipedia.org/wiki/Weinberger_v._UOP,_Inc https://en.wikipedia.org/wiki/Weinberger_v._UOP,_Inc. The court ruled: > Even assuming (without deciding) that Elon was Tesla’s controlling stockholder, the Tesla Board was conflicted, and the vote of the majority Tesla’s minority stockholders approving the Acquisition did not trigger business judgment review, such that entire fairness is the standard of review, the persuasive evidence reveals that the Acquisition was entirely fair… > Equally if not more important, the preponderance of the evidence reveals that Tesla paid a fair price—SolarCity was, at a minimum, worth what Tesla paid for it, and the Acquisition otherwise was highly beneficial to Tesla. Indeed, the Acquisition marked a vital step forward for a company that had for years made clear to the market and its stockholders that it intended to expand from an electric car manufacturer to an alternative energy company. The Court’s verdict, therefore, is for the defense.

croes 2y ago

Doesn’t mean it’s also a fair price this time

jfoster 2y ago
Any entity that can afford to invest billions of dollars can probably also afford to litigate if they see fit.

charles_f 2y ago

Arguably we'll never know. A court ruling that it's a fair price isn't the same as letting the market decide

trod1234 2y ago
Even if there was a market, any market naturally requires adversarial decision making in the negotiation of a deal to have economic calculation (what we generally view the benefit we derive from a market in the first place). When the same people are making the ask as making the buy, you literally cannot decouple the decision-making in a way that objectively eliminates cooperation. A market cannot exist when the entities involved abandon adversarial decision-making and cooperate. One's priority is always suborned by one or the other.
deleted 2y ago
[deleted]
DannyBee 2y ago
This is true but it's not as far off as you think. In this case, the court doesn't have to just find it was a fair price, but a fair process as well. That is, the standard the defendants have to meet (not the plaintiffs, the burden is actually on tesla here despite having been sued) is that the transaction was entirely fair to the corporation and shareholders- the process was a fair one, the price was a fair one, etc. I have trouble thinking of a case where you can prove all this[1] but the market would have come up with something different. Almost by definition, if the market would have decided to pay a lower price, either the price or the process was probably not fair. [1] Which again, you have to do affirmatively. You aren't just rebutting plaintiff evidence, the burden is on you to show the fairness

chairmansteve 2y ago

How's Solar City doing now? Not sure the court was capable of that judgement.

bamboozled 2y ago
Scandalous ?
cedws 2y ago
And what happened to Tesla solar roofs? Haven’t heard about those since like 2020. Who actually has one? And Tesla trucks? And full self-driving? And robotaxis? And the private venture around the moon? It’s like everyone just forgets Musk’s announcements that never get delivered on.
- thordenmark 2y ago
  Aren't Cyber trucks by Tesla? And FSD is basically here which means robotaxis are basically here. Now there are just regulatory hurdles and the long tail.
  - watwut 2y ago
    "Basically here" and "actually here" tend to be decades apart ... especially in Musks case. Tho, I think another company can be actually capable to make them actually working.
  - ben_w 2y ago
    He made much the same claim 6 years ago: https://www.inverse.com/science/55141-elon-musk-autonomous-driving https://www.inverse.com/science/55141-elon-musk-autonomous-d... """“I feel very confident predicting autonomous robo taxis for Tesla by next year. Not in all jurisdictions, because we won’t have regulatory approval everywhere. But we will have regulatory approval at least at some point next year,” Musk said toward the end of the presentation. “From our standpoint, if you fast forward a year, maybe a year in three months, but next year for sure, we will have over a million robo taxis on the road.”""" - Musk, April 2019
  - 2y ago

eximius 2y ago

[flagged]

vntok 2y ago
Pointing out disinformation is a valuable thing to do, and well in the spirit of hacker news.
- soulofmischief 2y ago
  [flagged]
  - claytongulick 2y ago
    When I read your comment, what I see is "I checked through their comment history. They disagree with my political viewpoint, so I'm going to use the popular talking points from my in-group to attack them." I glanced through your comment history as well, and I'm convinced that you are a lot smarter than that, and can add more to the conversation.
    - deleted 2y ago
      [deleted]
    - throwawaygmbno 2y ago
      Looking through your comment history it seems like you use a thesaurus on a few posts so that you can defend people like him in other posts.
      - johnisgood 2y ago
        What about my comment history?!
    - soulofmischief 2y ago
      > popular talking points from my in-group to attack them Pointing out that we're currently being de facto ruled by a circle of wealthy billionaires and millionaires is not a "talking point". This comes across as projection. > I'm convinced that you are a lot smarter than that Thank you. I'm not sure what you're looking for me to add to the conversation however, I just plainly said what I saw, which was them to bat for several oligarchs who are currently making a mockery of our country.

refurb 2y ago

Indeed. Grandparent is not correct, you can’t just assign “whatever” value in self-dealing transactions. The SEC and IRS weren’t born yesterday. It reminds me of people who come up with basic self-dealing transactions with some tax benefit and act like the idea wasn’t around 100 years ago and that regulations aren’t already in place.

deleted 2y ago

[deleted]

MrSkelter 2y ago

Regardless of the faith you have in the courts assessment time has shown the more critical opinion to be true. Solar City was a dead company, none of the promises they made has amounted to anything, they aren’t producing any products or revenue, and the deal has been shown to be self dealing in order to bail out his brother. Where are the solar roof tiles? What’s happened to the tax payer funded factory in NY?