Elon Musk says SpaceX and Tesla are planning the biggest merger in history | Business and economy

The tech mogul says the tie-up has “a lot of merit,” given the companies’ complementary work on AI.

Elon Musk has revealed that SpaceX and Tesla are exploring a possible merger, a tie-up that would create a corporate colossus worth more than $3 trillion.

Musk said Tuesday that his two largest companies had created special committees to study a merger.

The CEO of SpaceX and Tesla said the idea had “a lot of merit” given the two companies’ complementary work on artificial intelligence, but the committees reached no agreement on a proposal.

“They have to come up with something, and then it has to be voted on by shareholders,” Musk said during a SpaceX earnings conference call.

Musk, the world’s richest man with a net worth of more than $900 billion, said a merger would have to clear the “big hurdle” of a 50% vote among Tesla shareholders.

“Some people assume that a merger between SpaceX and Tesla is a certainty, and I think that would be a stretch,” Musk said.

“Do I think it would be a good idea? Yes. But ultimately shareholders have to support this.”

The largest corporate merger ever

A SpaceX-Tesla merger would be the largest corporate tie-up in history, far surpassing the $1.25 trillion union between SpaceX and xAI in February.

At current valuations, SpaceX and Tesla rank as the seventh and eleventh largest companies in the world, respectively, with a combined market capitalization of approximately $3.5 trillion.

Jerayr Haleblian, a mergers and acquisitions expert at the University of California, Riverside, said a SpaceX-Tesla merger has “solid logic” to support it.

“In a certain sense, the core of both businesses is expert manufacturing. From a technology transfer perspective, there should be significant information flows between the companies,” Haleblian told Al Jazeera.

“Both companies appear to have expertise in robotics, AI and energy infrastructure,” he said.

“As a result, the core competencies are applicable across all industry sectors. The key to success will be synergistic innovation, which I assume will flow from the acquisition.”

Stock market boost

Shares of SpaceX, which went public in June in the largest initial public offering (IPO) of all time, rose more than 8% after hours following Musk’s comments.

Tesla shares gained 1.8 percent.

Musk’s comments come as SpaceX reported its first quarterly profit on Tuesday, driven by strong growth in its AI and satellite internet divisions.

Net profit rose to $4.4 billion in the July-September quarter, compared with a net loss of $1.05 billion a year earlier.

Profit for the first three quarters was $413 million, compared with a loss of $2.59 billion in the same period a year earlier.