Chancery Sounds Warning On Distressed Acquisitions
Law360 (April 23, 2020, 4:01 PM EDT) -- A warning to potential acquirors of distressed targets appears at the end of the Delaware Chancery Court's recent opinion in In re Tesla Motors Inc. Stockholder Litigation.
The suit challenges the Tesla board's decision to acquire SolarCity as an alleged bailout of a floundering company in which Tesla's Elon Musk had a substantial economic interest. One of the claims on which the court refused to grant the Tesla defendants' motion for summary judgment, after reviewing the pretrial evidence, was that the Tesla board's decision to engage in the acquisition constituted "corporate waste."
While Vice Chancellor Joseph Slights acknowledged that corporate waste...
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