SpaceX and Tesla Explore a Merger Worth More Than $3 Trillion

Elon Musk says SpaceX and Tesla are exploring a merger that could value the combined company at more than $3 trillion. If that happens, it would be the biggest deal corporate history has ever seen. He confirmed the talks on Tuesday during SpaceX’s quarterly call, and said both companies have formed special committees of independent directors to handle the process.

Musk is not part of the negotiations. Since he runs both sides, he called himself conflicted and described the setup as a kind of kabuki dance, with other people talking while he stays out of the room. The committees still haven’t agreed on any terms, and Musk said there’s no guarantee they ever will.

The hardest part may be Tesla. Musk said approval there would be the main hurdle because the deal would need support from a majority of all outstanding Tesla shares. Dan Levy of Barclays thinks SpaceX would likely be the buyer in an all-stock transaction, and Reuters says Barclays sees a possible announcement as soon as December.

The market liked the idea. SpaceX is worth more than $2 trillion, Tesla just under $1.5 trillion, and together they would be worth more than Amazon. Tesla shares rose about 1.5 percent after hours, while SpaceX climbed as much as 8 percent after its quarterly results and the merger news.

Musk argues the logic is artificial intelligence. He says there is a lot of merit in combining the companies because they are already, in his words, pretty much in the superintelligence singularity. He points to possible gains in AI software, chip design, robotics, launches into space and Starlink connectivity. The two companies are already tied together through Terafab, a planned Texas chip plant for autonomous cars, humanoid robots and AI data centers in space, plus Tesla’s use of SpaceX cold-gas thrusters in a Roadster demo and Grok appearing free in many Teslas.

Wall Street is split between enthusiasm and governance worry. Gene Munster of Deepwater Asset Management puts the odds of a deal within two years at 95 percent, while Dan Ives of Yorkville Ives & Co called it a no-brainer, though he thinks Tesla shares may need to be around $550. Critics are focused on control, since one person sits on both sides of the table. Tesla reports results today, and its annual meeting in Texas follows in early December.