The SolarCity Stockholder Case. Chancery Found the Price Fair. The Supreme Court Affirmed.

The SolarCity acquisition has a merger ratio, a trial, and an appeal. The trial court found the price entirely fair. The Delaware Supreme Court affirmed. The plaintiffs’ theory at trial was that SolarCity was insolvent. The Supreme Court says that theory collapsed, and that the appellants did not challenge the trial court’s factual findings.

This page is the receipt. It sits on the lawsuits desk. The company history is SolarCity. The buyer is Tesla. The later pay case, a different docket, is Tornetta.

The appeal, in the opinion’s own frame

In re Tesla Motors, Inc. Stockholder Litigation, No. 181, 2022, was submitted March 29, 2023, and decided June 6, 2023. Justice Valihura wrote for the court, sitting en banc. The caption says affirmed. The case below is Court of Chancery C.A. No. 12711. The opinion says it is an appeal of an April 27, 2022 post-trial opinion.

The acquisition is the 2016 all-stock purchase of SolarCity Corporation by Tesla, Inc. Stockholders claimed Mr. Musk caused Tesla to overpay through his alleged domination and control of the Tesla board. The opinion says the foundational premise at trial was that SolarCity was insolvent. The Court of Chancery assumed, without deciding, that he was a controlling stockholder, applied entire fairness, and found the acquisition entirely fair.

Label: The Supreme Court’s description of the case. “Assumed, without deciding” means this opinion does not contain a holding that he was, or was not, a controlling stockholder. Entire fairness is the standard the trial court used on that assumption. Affirmance is the June 6, 2023 judgment.

The opinion says the appellants did not challenge the trial court’s factual findings. Their challenge was legal, aimed at how entire fairness was applied. The Supreme Court says the trial court erred in one portion of the price analysis, the portion that used SolarCity’s unaffected June 21, 2016 stock price, and that other bases were enough to support the opinion, “particularly in the face of the total collapse” of the insolvency theory, which the opinion calls their only fair-price theory at trial.

Label: The Supreme Court’s account of the error and of why it did not reverse. A stated error in one comparison is not a reversal. The insolvency theory’s collapse is the opinion’s phrase.

Who SolarCity was, in that opinion

The opinion says SolarCity was a publicly traded Delaware corporation founded in 2006 by Peter Rive and Lyndon Rive, Mr. Musk’s cousins. It developed and produced solar panels for residential and commercial use. He was chairman of the SolarCity board from 2006 until the closing in 2016, and its largest stockholder, holding approximately 21.9 percent of the common stock.

Label: The opinion. “Approximately 21.9 percent” is that sentence. It is not a Tesla share count, and it is not the later Texas certificate’s board list.

The ratio

The opinion walks the offers this way.

The Tesla board discussed a range of 0.122 to 0.131 Tesla shares per SolarCity share, which the opinion equates to $26.50 to $28.50 per SolarCity share. The initial offer, publicly announced June 21, 2016, after the close, was an exchange ratio of 0.122 to 0.131. The opinion says Tesla’s stock then fell “more than 10%, or $3.07 billion,” an amount greater than SolarCity’s entire market capitalization.

The final offer was 0.110 Tesla shares per SolarCity share. The opinion says that was significantly below the initial range. Evercore presented a fairness opinion to the Tesla board on July 30, 2016, that the final offer was fair, from a financial point of view, to Tesla. The opinion says neither Mr. Musk nor Antonio Gracias took part in the Tesla board’s vote on that offer.

A Form 8-K, as the opinion describes it, disclosed that the exchange ratio represented an equity value for SolarCity of approximately $2.6 billion, or $25.37 per share, based on a five-day volume-weighted average of Tesla’s trading price as of July 29, 2016.

The stockholder vote was November 17, 2016. The opinion says roughly 85 percent of the votes cast by Tesla’s stockholders were in favor. The acquisition closed November 21, 2016.

Label: The Supreme Court’s account of the trial record. The $2.6 billion and the $25.37 are the opinion’s description of that 8-K, not a second valuation this desk computed. The “more than 10 percent, or $3.07 billion” is the opinion’s description of the stock move. This page does not open a tape.

The opinion also says the trial court found that, by closing, SolarCity had 15,000 employees, $200 million a month in business, over $3 billion in future cash flows, over 300,000 customers, and net assets in excess of its market capitalization, and that Tesla booked an $89 million gain. It says the trial court found Tesla expected cost synergies of at least $150 million a year.

Label: What the Supreme Court says the trial court found. Those are not a 2026 energy-deployment table. Storage deployments are Megapack.

What the courts did with the insolvency claim

The opinion says the plaintiffs were “all in” on insolvency, and that their valuation witness “doubled down on his sworn testimony that SolarCity was worth nothing.” The trial court rejected the testimony that SolarCity was worthless and found it “solvent, valuable and never in danger of bankruptcy.” The Supreme Court says the appellants, on appeal, did not challenge that rejection.

On appeal they argued, among other points, that the trial court failed to include $5.35 billion of SolarCity liabilities Tesla assumed. Label: The appellants’ argument, as the opinion states it. It is not a finding that the price left those liabilities out. The judgment is affirmance.

The opinion says the trial court found that Mr. Musk “did not impede the Tesla Board’s pursuit of a fair price,” that the price was fair, and that he satisfied entire fairness and therefore did not breach his fiduciary duty.

Label: The Supreme Court’s reading of the trial opinion, and the judgment affirming it. “Did not breach” is the result the Supreme Court left in place. It is not a finding about any later Tesla transaction.

What this page does not confirm

• That the Supreme Court held he was a controlling stockholder. The trial court assumed it, without deciding. The appeal did not turn that assumption into a holding.
• A fresh discounted-cash-flow value. The opinion says the trial court found the experts’ DCF models unhelpful and disregarded them. This page does not build one.
• The $5.35 billion liability figure as the court’s arithmetic. It is the appellants’ point on appeal.
• That “entirely fair” is a forecast about Tesla Energy. It is a 2022 finding about a 2016 price, affirmed in 2023.

On the map

SolarCity is the company node. Tesla is the buyer. The move out of Delaware, years later, is the Texas conversion. The 2018 pay case is Tornetta. Megapack is the later storage series, not this merger ratio.

Sources

Checked October 20, 2026.