Elon Musk has revealed that SpaceX and Tesla are examining a possible merger — a deal that, if realized, would create a conglomerate worth more than $3 trillion, according to information disclosed during SpaceX's earnings call.
According to Musk, his two largest companies have established special committees to study a merger. The CEO of both SpaceX and Tesla said the idea has "a lot of merit" given the two firms' complementary work in artificial intelligence, but the committees have not yet reached any agreement on a specific proposal.
"They have to come up with a proposal, and then that proposal has to be put to shareholders for a vote," Musk said.
The world's richest person, with a net worth of more than $900 billion, said a merger would have to clear a "high bar" — the support of 50 percent of Tesla's shareholders.
"Some people think a SpaceX–Tesla merger is a done deal, and I think that's overstating it," he said. "Do I think it's a good idea? Yes. But ultimately, shareholders have to support it."
The largest deal in corporate history
If it happens, a SpaceX–Tesla merger would rank as the largest deal in corporate history, far surpassing the $1.25 trillion combination of SpaceX and xAI in February.
At current valuations, SpaceX and Tesla are respectively the seventh- and eleventh-largest companies in the world, with a combined market capitalization of roughly $3.5 trillion.
Jerayr Haleblian, an expert on mergers and acquisitions at the University of California, Riverside, said a SpaceX–Tesla deal has "solid logic" behind it.
"In a sense, the core of both businesses is high-specialization manufacturing. From a technology-transfer standpoint, there would be significant information flows between the two," Haleblian told Al Jazeera.
"Both companies appear to have expertise in robotics, AI and energy infrastructure. As such, core skills can be applied across multiple domains. The key to success will be synergistic innovation, which I expect to come from this deal."
Shares jump
SpaceX stock — the company went public in June in the largest initial public offering of all time — rose more than 8% in after-hours trading following Musk's remarks. Tesla shares gained 1.8%.
Musk's comments came on the same day SpaceX reported its first quarterly profit, driven by strong growth in artificial intelligence and satellite internet.
Net profit reached $4.4 billion in the July–September quarter, reversing a net loss of $1.05 billion in the same period a year earlier. Profit over the first three quarters totaled $413 million, compared with a loss of $2.59 billion in the same period last year.
