Elon Musk's merger math
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The inevitable merger of SpaceX and Tesla took an orbital leap forward yesterday, with Elon Musk calling it "a good idea" and both companies forming special committees to discuss a deal.
Why it matters: This would be the largest corporate tie-up in history.
- SpaceX ended trading yesterday with a $1.95 trillion market cap, making it the country's seventh most valuable company, while Tesla landed in 11th place with a $1.48 trillion market cap. Shares of both companies are up sharply this morning.
- The record-holder is Vodafone paying $183 billion for Mannesmann in 2000, which works out to around $350 billion when adjusting for inflation.
Flashback: When SpaceX absorbed xAI earlier this year, we noted that Tesla was a likely next step. And not just because it would simplify the Elon Inc. org chart.
- "Musk is ... betting his empire on the idea of orbital data centers that are powered by the sun ... Tesla would make the chips, SpaceX would be responsible for launch and satellites, and xAI would build the models and agentic networks."
Zoom in: Musk essentially controls the vote at SpaceX, and has the ability to put down board dissent.
- Tesla is more complicated, as Musk owns a much smaller stake and other shareholders would get a say. Perhaps that's why the company just introduced a new "voluntary retail voting program," whereby retail shareholders can authorize their shares be voted in accordance with Tesla's board recommendations.
- Texas also has some special anti-takeover provisions that would apply, given that Tesla relocated its incorporation from Delaware in 2024.
Zoom out: Politics also could play a role here, particularly if Democrats take control of Congress (something Musk is spending huge to prevent).
- There's a controversy brewing over what Musk and SpaceX did or didn't do vis-à-vis Ukraine's access to Starshield — a vital tool in its war with Russia.
- If investigations determine that Musk did indeed throttle access, or encouraged it to be throttled, there could be pushback against a merger that only would increase SpaceX's size and power.
The bottom line: Musk cautioned that saying a merger definitely would happen is "overstating it," but he tends to move very fast once he gets the transactional truck rolling.
