Tesla and SpaceX Merger Talks, Where They Stand
Talks of a Tesla-SpaceX combination have moved from speculation to a process with a shape, though no terms have been agreed and no deal is guaranteed. Both companies have formed independent review bodies, and the market has begun pricing in the possibility.
It began on the Oct. 20 SpaceX earnings call. Musk said the boards of Tesla and SpaceX each formed a special committee of independent directors. The committees were created at shareholders’ request to examine whether a combination would benefit shareholders. Musk, as chief executive of both companies, cannot take part in the discussions. He said treating a deal as done would be an overstatement: no transaction terms have been agreed, and none is guaranteed.
The bar for approval is high. A combination would need the support of a majority of all Tesla shares outstanding, not just a majority of votes cast. Shares not voted would effectively count against it, so nearly every shareholder must be persuaded. Musk called it a “high hurdle.”
Musk’s stated logic rests on four areas: superintelligence software, chip design, robotics and communications, plus Terafab, the artificial intelligence chip plant pursued with SpaceX, Tesla and Intel. Sharing engineering talent and AI infrastructure would create synergies beyond what either company could achieve alone, he argues.
No new information came on the Oct. 21 Tesla earnings call. Musk said he had “said everything that should be said yesterday,” comparing the topic to “tap dancing through a minefield,” and Tesla executives did not take analysts’ questions on the matter, the Wall Street Journal reported. The line from the Oct. 20 SpaceX call stood.
Wall Street’s reaction leans toward a deal. Analyst Dan Ives put the odds of a combination by the end of 2027 at 80 to 90 percent and estimated a combined value of $5 trillion. RBC estimated $3.74 trillion, JPMorgan called the strategic logic “coherent,” and Barclays saw a stock-swap acquisition of Tesla by SpaceX as the most likely structure.
Concerns about the pace of talks also emerged. Reuters reported on Oct. 22, citing a person familiar with the negotiations, that Musk’s public endorsement of a combination rattled negotiators and that increased shareholder scrutiny could delay the process by weeks. According to that person, SpaceX approached Tesla in recent weeks, both sides hired advisers, and talks are at an early stage. Structures under discussion are an acquisition of Tesla by SpaceX or a combination under a new holding company, possibly in an all-stock deal.
Nothing is settled. The special committees are still reviewing terms, and Musk himself is excluded from the discussions. The next point to watch is Tesla’s shareholder meeting on Dec. 3. A related announcement could come before then, but that too is unconfirmed.
