(Reuters) – U.S. lender JPMorgan Chase agreed on Friday to drop its lawsuit against Tesla, which accused the electric vehicle maker of “flagrantly” violating a contract between the two companies in 2014 regarding warrants that Tesla sold to the bank.
The move to drop the lawsuit was announced in a one-page filing by both companies in a Manhattan court, where they said they would drop their claims against each other.
Bloomberg News announced the settlement earlier on Friday.
Neither company disclosed the settlement terms, court documents show.
JPMorgan and Tesla did not immediately respond to Reuters requests for comment.
JPMorgan sued Tesla in November 2021, seeking $162.2 million, alleging Tesla breached a 2014 contract involving stock warrants it sold to the bank that the bank believes became more valuable because of a tweet from 2018 from Tesla CEO Elon Musk.
Warrants give the holder the right to purchase shares of a company at a fixed exercise price and date.
Musk’s tweet on August 7, 2018 that he could take Tesla private at $420 per share and that financing was “certain”, and his subsequent announcement 17 days later that he was abandoning the plan, caused significant volatility in the stock price , the bank said. On both occasions, JPMorgan adjusted the strike price “to maintain the same fair market value” as before the tweets, the bank said.
JPMorgan said it was obliged to revise the warrants after Musk’s tweet, and that a subsequent tenfold increase in Tesla’s stock price required the company to make payments, which it had failed to do.
Tesla sued JPMorgan in January 2023, accusing the bank of seeking a “windfall” from repricing the warrants.
Musk, who bought Twitter for $44 billion in 2022, agreed in a 2018 deal with the U.S. Securities and Exchange Commission to get pre-approval from a Tesla lawyer for some tweets.
(Reporting by Gnaneshwar Rajan in Bengaluru; Editing by Muralikumar Anantharaman)
