Elon Musk, CEO of both Tesla $TSLA and SpaceX, said the boards of the two companies have set up special committees to look at whether the businesses should combine. He made the disclosure on Tuesday during SpaceX's third-quarter earnings call.
The committees are made up of independent directors, and Musk said shareholders asked for them to be set up. They have not settled on terms for any deal. Musk did not name the members, according to TechCrunch.
Musk said he is excluded from the discussions because of his position. "Because I'm a conflicted party, I can't actually be in the discussions of the special committees," he said, according to TechCrunch.
Musk said he favors the proposal, though he warned that a deal is far from guaranteed. "Some people out there assume that a SpaceX and Tesla merger is a certainty," he said. "I think that would be overstating it."
"Do I think it would be a good idea? Yes. But at the end of the day, the shareholders have to be supportive of this," Musk said.
A deal would need the support of 50% of all Tesla shareholders, not just a majority of the votes cast, Musk said. Musk controls over half of SpaceX's voting power, so gaining backing from SpaceX shareholders should be simpler, according to TechCrunch.
Musk said there is "a lot of merit to combining the companies." He pointed to cooperation on AI software, robotics, SpaceX's Starmind orbital data center project and Terafab, the chip manufacturing project the two companies share, according to TechCrunch.
SpaceX carries a valuation near $2 trillion and Tesla one near $1.5 trillion, for a combined $3.5 trillion. A merger would surpass every other corporate combination on record, according to Bloomberg. Shares of SpaceX and Tesla rose in after-hours trading on Tuesday.
The two companies have business ties. SpaceX has spent over $100 million on Tesla Cybertrucks, and xAI also buys large quantities of Tesla's utility-scale batteries, according to Bloomberg.
Musk's remarks arrived just as SpaceX reported its first quarterly profit as a public company, posting net income of $4.4 billion on revenue of $14.6 billion.
Tesla filed its proxy statement on Monday for its Dec. 3 annual meeting. The ballot contains no vote on a merger with SpaceX.
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