Richard Clough and Ed Ludlow
Elon Musk said SpaceX and Tesla have formed special committees to explore a potential merger, a preliminary step toward what would rank as the largest corporate tie-up of all time.
“I do think there’s a lot of merit to combining the companies,” Musk, the chief executive officer of both companies, said Tuesday on SpaceX’s earnings webcast. “There’s a lot to be gained from cooperating on developing superintelligence software.”
Musk said he isn’t participating in the committee discussions because he is a conflicted party, and that the committees have yet to agree on terms.
A blockbuster deal would unite Tesla’s electric vehicle, energy and robotics businesses with SpaceX’s rocket launch and satellite internet operations. Underpinning it all are the companies’ shared ambitions in artificial intelligence — or what some in the industry are now calling superintelligence — fuelling investments in areas such as data centres and driverless cars.
SpaceX shares rose 4.6 per cent in post-market trading after reporting quarterly results, while Tesla climbed 1.2 per cent.
The scope of a potential merger is staggering, with both SpaceX and Tesla among the largest companies in the world and holding dominant positions in their respective industries. SpaceX, formally known as Space Exploration Technologies Corp, has a market value of about $US2 trillion, while Tesla is worth nearly $US1.5 trillion.
SpaceX and Tesla already have numerous business ties, overlapping investor bases and even some shared personnel. The rocket maker has purchased more than $US100 million worth of Tesla Cybertrucks, while xAI is a major customer of Tesla’s utility-scale batteries.
A combination has been widely expected since SpaceX rode a wave of investor enthusiasm to a record initial public offering this year, giving the company both currency and an implicit green light from shareholders to make a play for Tesla. Bloomberg News reported in January that SpaceX had weighed a Tesla merger before ultimately deciding to acquire xAI, Musk’s artificial intelligence startup.
Musk cautioned that a merger isn’t certain and would require shareholder support. He said Tesla would need approval from 50 per cent of all shareholders, rather than simply a majority of those voting.
“Some people out there assume that a SpaceX and Tesla merger is a certainty,” Musk said. “I think that would be overstating it.”
Bloomberg
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