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Elon Musk Says SpaceX-Tesla Merger Would Be A Good Idea, Independent Committees Formed
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Independent committees have been formed to explore a SpaceX-Tesla merger. Musk says a SpaceX-Tesla merger would be a good idea and is under consideration.
Musk backs merger talks
Elon Musk said a merger between SpaceX and Tesla would be a good idea, while telling investors that it was ultimately up to special committees of independent directors and to shareholders. Musk said he felt he was "tap dancing through a minefield" while discussing the proposal, and he added that a merger "would be a good idea" during a call with analysts on Tuesday.
Musk said he could not participate in the discussions because of a conflict of interest, and he said the special committees had been formed at the request of shareholders. SpaceX reported its first quarterly profit since going public, posting net income of $4.4 billion for the July-September quarter and revenue of $14.6 billion, up 161 per cent from a loss of $1.1 billion a year earlier.
Committees, hurdles, and terms
Musk said the special committees have not reached agreement on the terms of any transaction and there is no guarantee that they will, even as he described "a lot of merit" in combining the companies. Musk said shareholders ultimately would need to approve a deal, and he described the requirement as "quite a high hurdle" because it would need the support of a majority of all Tesla shares rather than just those voting.
Musk said he is a "conflicted party" as the chief executive of both companies, and he said he cannot be in the discussions of the special committees. TechCrunch said Tesla has seven independent board members under Nasdaq listing standards, including board chair Robyn Denholm and committee chair Ira Ehrenpreis, while SpaceX lists six independent directors including Ira Ehrenpreis.
What the deal would hinge on
SpaceX’s earnings call tied the merger idea to AI and computing, with Musk saying there was "a lot to be gained from cooperating" on superintelligence software, chip design, robotics, and connectivity. SpaceX’s results showed AI driving growth, with revenue rising more than ninefold to $7.6 billion for its Super Intelligence segment, while Starlink revenue rose 69 per cent to $5.2 billion and its consumer subscriber base reached 13.6 million.
“But at the end of the day the shareholders have to be supportive of this.”
Musk said independent director committees at both companies had been set up to examine the proposal at shareholders’ request, but he stressed that discussions had not produced any agreed terms and there was no guarantee of a deal. The Verge said Musk described the Tesla side as requiring a 50 percent vote of all shares, not just those who vote, and it said the committees have not reached agreement on the terms of any transaction.