Tesla and SpaceX have created special committees to explore a possible merger. Elon Musk disclosed the talks on SpaceX’s third quarter earnings call on Tuesday. He said shareholders asked for the committees, which are made up of independent directors.
Musk sits on neither committee and takes no part in the discussions. “Because I’m a conflicted party, I can’t actually be in the discussions of the special committees,” he said. He described the arrangement as “an odd kabuki dance” with two groups talking while he stays outside the room.
The committees have not agreed on terms, and Musk said nothing is guaranteed. Approval on the Tesla side carries a steep bar. He said the deal needs a yes vote from 50 percent of all shares, not just from the shareholders who cast ballots.
Even so, Musk called a merger a “good idea.” He argued that combining the two companies makes sense “as we are pretty much in the superintelligence singularity.” He listed areas where the firms could pool work: superintelligence software, chip design, the TeraFab project, robotics, mass to orbit through the Starmind constellation, and connectivity.
A combined company would be worth upwards of $3.6 trillion, which would place it among the largest corporate entities on earth. The structure is unsettled, and direction matters a great deal. Tesla would have to issue millions of new shares to buy SpaceX, diluting everyone who already owns the stock. SpaceX’s launch plans also demand tens of billions of dollars a year, money that could otherwise fund Tesla factories and battery plants.
Most analysts and legal experts expect SpaceX to absorb Tesla through a stock swap. SpaceX has held a higher valuation since its IPO, so that route would leave its shareholders with majority control. SpaceX’s connectivity business reported $5.2 billion in revenue in the quarter.
Some Tesla investors may resist the dilution. Others see one stock that bundles robot cars, humanoid robots, AI and Mars ambitions. Tesla shareholders backed Musk’s enormous pay package last year, which suggests real tolerance for his long range plans.
Related: SpaceXAI to Put an NVIDIA Vera Rubin AI Rack in Orbit.
Source: The Verge.
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