Musk says Tesla, SpaceX exploring possible merger
Independent committees at both companies have not agreed on terms, and a Tesla vote would need 50% of all shares.
On the Dash:
- Tesla and SpaceX are in merger talks, with independent committees at both companies reviewing a possible deal.
- Musk says no terms have been agreed on, and Tesla needs approval from 50% of all shares.
- Dealers have no immediate change to plan for while the merger remains under review.
Elon Musk said Tuesday that combining Tesla and SpaceX would be a good idea during SpaceX’s third-quarter earnings call, where he confirmed both companies have formed special committees to review a merger. During the call, Musk cited “superintelligence” software, chip design, the Terafab chip project, robotics, mass to orbit and Starlink connectivity as areas for cooperation.
What stands in the way
According to Musk, any deal has to clear the special committees before shareholders vote on it. Shareholders requested the committees, which consist of independent directors. Musk, CEO of both companies, said he can’t take part in their discussions because he is a conflicted party.
Although the committees have yet to agree on terms, Musk said there is no guarantee that they will. He also cautioned that some people assume a merger is certain, which he said overstates the case. Musk told investors in July that the companies couldn’t discuss getting combined on an earnings call.
Notably, Musk said a Tesla vote would need 50% of all shares, not just the shares voted, which he described as a high bar.
SpaceX posts $14.6 billion in revenue
Musk spoke after SpaceX reported third-quarter revenue of $14.6 billion, up 161% from $5.6 billion a year earlier, according to its earnings release. Net income was $4.4 billion, compared with a net loss of $1.1 billion in the year-ago quarter. Adjusted EBITDA reached $8.8 billion, up 306%.
Super Intelligence segment revenue was $7.6 billion, driven primarily by cloud services agreements, CFO Bret Johnsen said on the call. That accounted for more than half of total revenue. Moreover, fourth-quarter capital spending is expected to reach $35 billion to $40 billion, up from $19.6 billion in the third quarter, Johnsen said.
What happens next
Tesla is scheduled to report Q3 results after the market closes Wednesday. Dealers who track Tesla as a competitor should watch for any further comment from the company and for filings that name committee members, advisers or terms. Until the committees reach terms, the merger remains under review.