SpaceX and Tesla have advanced in merger negotiations. Both companies, owned by Elon Musk, could announce the largest corporate deal in history as early as December. This was reported by Bloomberg, citing sources familiar with the closed discussions.
Image source: Tesla
The parties are also considering a scenario in which the official announcement will be postponed to early 2027. According to the publication’s interlocutors, the boards of directors and consultants of both companies are now working on the terms of the merger and the management structure of the future merged corporation.
The merger of Elon Musk’s two largest assets will create a conglomerate that combines the production of electric vehicles, energy storage systems, rockets and satellites. The main goal of the association is to develop artificial intelligence technologies for space, unmanned vehicles and humanoid robots. At the same time, the companies already have joint projects, including the construction of the Terafab semiconductor plant in Texas.
However, to close the deal, the parties will have to overcome serious regulatory obstacles, in particular, resolve the issue of how to isolate Tesla’s business in China. As JPMorgan analyst Rajat Gupta noted last month, national security concerns surrounding SpaceX’s contracts with the U.S. government and defense establishment, combined with Tesla’s large and profitable production in China, create “conflicting factors.” This may make it difficult to obtain regulatory and shareholder approval for the transaction.
The merger will be a serious test in the context of the political environment following the midterm elections in the United States. Democrats, who gained control of Congress, have promised to review Musk’s business and political ties. According to Bloomberg, the parties aim to close the deal before the end of Donald Trump’s presidential term. One of the current issues under discussion is the number of shares that SpaceX will have to provide to Tesla investors as part of this deal.
In October, Musk said the boards of directors of both companies had formed special committees of independent directors to consider the merger.
SpaceX’s market value after its initial public offering (IPO) in June is more than $1.9 trillion, while Tesla’s capitalization is about $1.5 trillion. Tesla’s annual shareholder meeting is scheduled for December 3.
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