Musk calls a SpaceX-Tesla merger a good idea as both boards set up special committees

Elon Musk said on Tuesday that a merger of SpaceX and Tesla would be “a good idea” and that the two companies had formed special committees to consider a deal^1,8. The committees are made up of independent directors^4,11.

Musk made the comments on SpaceX’s earnings call⁴. “Because I’m a conflicted party, I can’t actually be in the discussions,” he said⁴. He added that “there’s a lot to be gained” by combining the companies^4,10.

Tesla’s committee is drawn from its seven independent directors, with Robyn Denholm as chair¹². Musk is chief executive of both companies⁴.

Why it matters to investors

The size of the deal sets it apart. A combination would be the biggest merger in history¹⁰. One estimate values the combined business at $3.6 trillion², while another puts it at $3.5 trillion¹¹.

SpaceX shares rose 8% in extended trading after Musk’s comments¹, and gained again in premarket trading after an earnings beat⁵. SpaceX reported a sharp rise in revenue and its first profit⁷.

The two companies have increasingly collaborated on chips and AI projects, and Musk leads both, which had already fed speculation that they could join forces⁴. A merger would turn that working relationship into common ownership^4,9.

Governance is the central issue for shareholders. Musk has said he cannot take part in the discussions because he is conflicted⁴. The talks put his accountability to the test, since he sits on both sides of any deal¹¹. The independent committees are meant to handle the talks in his place^4,11.

What to watch

The committees’ work comes first. Their membership has been set out in the companies’ filings^6,12, and any recommendation would show how each board values its side of the deal¹¹.

Investors will also watch the terms. With estimates of the combined value ranging from $3.5 trillion to $3.6 trillion^2,11, the terms would decide how that value is shared between the two sets of shareholders^2,11.

SpaceX’s results are a further input. Its first profit and rising revenue⁷ strengthen its hand in any negotiation, and the market reaction to the earnings beat shows investor appetite for the stock^1,5.

Finally, reaction from investors and analysts is still forming⁸. Musk’s view is clear, but the decision rests with directors who must show that they acted independently of him^3,4.