March 28, 2018 / 9:52 PM / in 7 months

Tesla shareholder lawsuit against SolarCity deal set to proceed

(Reuters) - A class action lawsuit by Tesla Inc shareholders against the electric car maker’s chief executive, Elon Musk, and the company’s board over the SolarCity deal was set to proceed after a Delaware judge refused to dismiss it.

SpaceX founder Elon Musk pauses at a press conference following the first launch of a SpaceX Falcon Heavy rocket at the Kennedy Space Center in Cape Canaveral, Florida, U.S., February 6, 2018. REUTERS/Joe Skipper - HP1EE2701YWP0

Tesla agreed to buy solar panel installer SolarCity for $2.6 billion (£1.9 billion) in an all-stock deal in 2016.

Musk was the biggest shareholder in both Tesla and SolarCity at that time, and his SolarCity shares were converted to $500 million of Tesla shares.

It is "conceivable that Musk, as a controlling stockholder, controlled the Tesla board" during the SolarCity deal, the judge commented here

The lawsuit alleged that the board breached its duties to shareholders in approving the SolarCity deal.

Reporting by Nivedita Balu in Bengaluru; Editing by Sriraj Kalluvila

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