Musk says Tesla-SpaceX merger is 'a good idea' as boards form special committees
In short
Elon Musk said on Oct. 20, on SpaceX's third-quarter earnings call, that merging Tesla and SpaceX would be "a good idea" and confirmed that both boards have formed special committees to discuss a tie-up. He said the committees have not reached agreement on terms, and that he is not taking part in their discussions because of a conflict. SpaceX reported 161% revenue growth for the quarter.
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Elon Musk said on Tuesday, Oct. 20, that merging Tesla and SpaceX would be "a good idea". He spoke on SpaceX's third-quarter earnings call and confirmed that the boards of both companies have formed special committees to discuss a tie-up, according to Gulf News. Reuters, as cited by Gulf News, called the remarks the first official confirmation that the companies were formally talking. [ 1 ]
The committees were formed at shareholders' request and consist of independent directors. Musk said that as a conflicted party he cannot take part in their discussions. Forbes Middle East attributed the conflict to his ownership stakes in both companies. He pushed back on assumptions that a merger is inevitable, saying that would be overstating it, and said the committees have not reached agreement on the terms of any transaction. Forbes Middle East said neither company has disclosed proposed terms or a timetable. [ 1 , 4 ]
On the Tesla side, Musk said a deal would need approval from 50% of all shares, not just those voting. Barclays has suggested a deal could be announced before Tesla's annual meeting in December, Gulf News reported. Tesla was expected to report third-quarter financials on Wednesday. [ 1 , 4 ]
Musk gave reasons for combining the companies. "I do think there's a lot of merit to combining the companies as we are pretty much in the superintelligence singularity," he said, naming superintelligence software, chip design, the Terafab, robotics, mass-to-orbit with the Starmind constellation of orbital data centres, and connectivity as areas for cooperation. Emirates 24|7 and The National said a merger would create one of the most valuable companies in the world, worth about $3.5 trillion, and noted that Musk owns nearly a fifth of Tesla and holds voting control at SpaceX. Arabian Business put the potential value at $3 trillion. [ 2 , 4 , 5 , 6 ]
SpaceX reported 161% revenue growth for the quarter. Gulf News gave revenue as $14.58 billion, and Forbes Middle East said that beat analysts' estimate of $12.72 billion. Forbes Middle East reported net income of $4.4 billion, compared with a $1.1 billion loss a year earlier, and said its artificial intelligence business revenue rose 830% to $7.6 billion. Connectivity revenue rose 69% to $5.2 billion, and Starlink subscribers rose to 13.6 million from 12 million. [ 1 , 4 , 7 ]
Gulf News said SpaceX shares climbed about 5% in extended trading after the results. Forbes Middle East said shares rose over 4% in after-hours trading and were up nearly 10% at 10:30 a.m. EDT on Wednesday. [ 1 , 7 ]
Why it matters
Outlets describe a combined company as one of the most valuable in the world, worth about $3.5 trillion by two outlets' account, though one outlet cites about $3 trillion. No agreement or terms have been disclosed, so the outcome remains open.
Key facts
- Musk said on Tuesday, Oct. 20, that merging Tesla and SpaceX would be "a good idea". [ 1 , 2 , 5 ]
- The boards of both companies have formed special committees of independent directors, at shareholders' request, to discuss a tie-up. [ 1 , 4 ]
- Musk said he cannot take part in the committees' discussions because he is a conflicted party. [ 1 , 4 ]
- Musk said a deal would need approval from 50% of all Tesla shares, not just those voting. [ 1 , 4 ]
- SpaceX reported 161% year-over-year revenue growth for the third quarter, with revenue of $14.58 billion. [ 1 , 7 ]
- SpaceX reported net income of $4.4 billion for the quarter. [ 4 , 7 ]
- Barclays has suggested a deal could be announced before Tesla's annual meeting in December. [ 1 ]
Confirmed by several sources
- Musk publicly said a Tesla-SpaceX merger is a good idea. [ 1 , 2 , 3 , 4 , 5 ]
- Special committees of independent directors have been formed at both companies, at shareholders' request. [ 1 , 4 ]
- Musk is not taking part in the committees' discussions because of a conflict. [ 1 , 4 ]
- No agreement on terms of a transaction has been reached. [ 1 , 4 ]
- SpaceX reported 161% revenue growth and about $4.4 billion in net income for the third quarter. [ 1 , 4 , 7 ]
Still unclear
- Whether a merger will happen and on what terms. Musk said assuming a merger is inevitable would be overstating it; Forbes Middle East says neither company has disclosed terms or a timetable.
- When a deal might be announced. Only Barclays' suggestion of a date before Tesla's December annual meeting is given, in a single source.
- The value of a combined company. Two outlets say about $3.5 trillion, while Arabian Business's summary says $3 trillion.
- How much SpaceX shares rose after the results. Gulf News reports about 5% in extended trading, Forbes Middle East reports over 4% after hours and nearly 10% on Wednesday morning.
What local media are saying
Timeline, local time
- Gulf News publishes its report on Musk's remarks and the special committees. [ 1 ]
- Emirates 24|7 publishes an explainer on a possible merger. [ 2 ]
- Forbes Middle East reports SpaceX's quarterly profit and Musk's backing of the merger. [ 4 ]
- Arabian Business reports Musk says SpaceX and Tesla are exploring a merger. [ 6 ]
- Forbes Middle East reports SpaceX shares up nearly 10% on Wednesday morning. [ 7 ]