Musk Says Tesla and SpaceX Boards Are Weighing a Possible Merger

Elon Musk said Tuesday that special committees at both Tesla and SpaceX are examining whether the two companies should merge, though no terms have been agreed and a deal is not guaranteed. Musk, who is chief executive of both companies, said he favors the idea, according to reports from NBC News and the BBC.

Any combination would need approval from shareholders, and Musk called the bar for Tesla's investors "quite a high hurdle to achieve," the BBC reported.

What Musk said on the earnings call

Musk spoke during a call with Wall Street analysts about SpaceX's quarterly results. NBC News reported that the results beat estimates and that SpaceX's revenue more than doubled, partly because it rents out computing capacity to other artificial intelligence firms.

According to NBC, Musk said the boards of the two companies had formed their committees separately. He said the committees had not reached agreement on any transaction and that there was no assurance they would. He pushed back on the idea that a merger is a sure thing, saying that view overstates where things stand.

Musk also said he sees “a lot of merit to combining the companies.” He pointed to current or possible future cooperation in AI software development, chip design and robotics, NBC reported.

Why Musk is not part of the talks

Musk said he is not on either committee and is not involved in the negotiations. He described himself as a conflicted party under securities regulations because he leads both companies. NBC reported that the committees are made up of each board's independent directors, though Musk did not say who the members are.

He described the arrangement as awkward, since groups of people are talking about a deal and he cannot take part. He also said that even answering an analyst's question on the subject felt like walking through a minefield.

The size of a possible deal

The BBC reported that Tesla is valued at roughly $1.5 trillion and SpaceX at $2 trillion. A combination of the two would be one of the largest mergers in history, the BBC said.

NBC reported that the stock market has speculated intensely about a tie-up. The companies already overlap in some areas, including semiconductor manufacturing. In January, Tesla announced it would invest about $2 billion to buy shares in an AI startup that is a subsidiary of SpaceX.

Musk's earlier consolidation of his companies

Musk has combined other holdings before, according to NBC. Last year he merged his social media company X with his AI startup, then called xAI. In February, SpaceX acquired xAI, which Musk has since renamed SpaceXSI.

What this means for Tesla and SpaceX shareholders

For now, nothing has been decided. The committees are at the discussion stage, and Musk said there is no guarantee they will agree on terms. A merger would then have to win shareholder support at both companies.

The BBC reported that at least 50% of Tesla's shareholders would need to approve a deal. Musk said the decision would ultimately rest with shareholders. Because he is excluded from the committee talks, the independent directors on each side will be the ones weighing the terms. The sources do not report when the committees might conclude their work.

Sources: Fox Business, BBC News, NBC News