Musk’s public endorsement of SpaceX-Tesla deal may throw a wrench in talks
TSLA•Musk’s endorsement of a potential $3.5 trillion SpaceX-Tesla merger has unsettled some people involved in talks, who worry it could invite shareholder scrutiny and delay the process by several weeks. The companies are discussing structures including an acquisition or a merger under a new holding company.
1. Endorsement unsettles talks
Musk’s public endorsement of a potential $3.5 trillion merger between SpaceX and Tesla has rattled some people involved in the discussions, who worry his comments could prompt shareholder scrutiny and delay the process by several weeks. One person with direct knowledge of the talks called the disclosure a “mess” because it could raise questions about how well Tesla shareholders’ interests would be represented.
2. Possible deal structures
The companies have hired advisers, but discussions are at an early stage, according to three people familiar with the matter. SpaceX approached Tesla in recent weeks, and the companies are considering a SpaceX acquisition of Tesla or a merger under a new holding company, with possible consideration including an all-stock deal. Musk said both companies had formed special committees to evaluate a transaction.
3. Shareholder scrutiny
Some participants see parallels with Tesla’s 2016 acquisition of SolarCity, which led to years of litigation over Musk’s involvement; courts ultimately upheld the acquisition as fair, and Tesla directors settled allegations for $60 million. Musk said he cannot participate in the special committees’ discussions, and advisers are in contact with his lawyers to ensure he is recused. Any future deal would also face global regulatory scrutiny, particularly because of Tesla’s China business and SpaceX’s US defense and AI work.
