SpaceX and Tesla form independent committees to study possible merger

Committees begin reviewing a possible merger

Latin Times reports that on October 20, SpaceX and Tesla each formed independent special board committees to evaluate a possible merger. The committees were created at shareholder request. Elon Musk said on Tuesday that the two boards had done so and called the idea “a good idea,” while also saying the outcome is not assured.

Musk said he cannot participate in either committee’s work because securities rules treat him as a conflicted party. He described the setup as an “odd kabuki dance,” in which two groups discuss a transaction involving a common owner who is not allowed in the room. According to the article, the committee formation came on the same evening SpaceX reported its third-quarter earnings, which fueled investor speculation.

Musk says there is business logic, but no deal terms yet

On SpaceX’s earnings call, Musk said the two companies have a lot to gain from working together on artificial intelligence, chip design and robotics. Latin Times reports that he framed the merger discussion as more than a financial transaction, but also said that assuming a deal is certain would be overstating it. He confirmed that the committees have not agreed on any terms.

The article says the current market value of the two companies together is about $3.5 trillion, based on people familiar with the discussions. It adds that some analysts have put the combined value even higher, with one estimate cited in financial media near $5 trillion. Latin Times says either figure would exceed the $1.25 trillion SpaceX-xAI acquisition completed in February 2026, which the article describes as the largest private corporate combination on record.

SpaceX’s AI revenue drives the merger case

Latin Times says the strongest business argument for combining the companies comes from artificial intelligence. SpaceX’s third-quarter results, announced the same evening as the committee news, showed revenue of $14.6 billion, up 161% from a year earlier and above Wall Street expectations of about $12.7 billion. Earnings were $0.35 per share, nearly three times the analyst estimate of around 13 cents.

The article says the biggest driver was SpaceX’s Super Intelligence segment, which it describes as the company’s AI and compute infrastructure business. That unit produced $7.6 billion in quarterly revenue, up 830% from the prior year, and for the first time it brought in more than SpaceX’s Starlink connectivity business. Latin Times also reports that Evercore ISI expects SpaceX to end 2026 with an annualized revenue run-rate of about $104 billion, slightly above the company’s own $100 billion target.

Spending plans, shared projects and political timing

The article says SpaceX is increasing spending quickly. In its third-quarter earnings release, the company guided fourth-quarter 2026 capital expenditures at $35 billion to $40 billion. Tesla’s guidance for full-year capital spending is about $20 billion, with much of that aimed at AI infrastructure and autonomous vehicle systems.

Latin Times cites UC Riverside mergers-and-acquisitions expert Jerayr Haleblian as saying the combination has industrial logic. The article notes several existing links between the companies, including a jointly developed Terafab semiconductor complex in Texas valued at $16.8 billion and intended to supply chips for Tesla’s Optimus robots and SpaceX’s orbital data centers. It also says SpaceX provides Starlink connectivity for Tesla’s Cybercab autonomous taxi and AI services for Tesla vehicles. The Tesla Roadster unveiled on October 1 will include a limited-edition version with an optional SpaceX cold-gas thruster package, according to the article.

Bloomberg, citing people close to the talks, reported that one timeline goal is to finish any deal while the Trump administration is still in office. Latin Times says that has added urgency because regulatory conditions for large tech combinations are generally seen as more favorable under the current White House than they may be later.

Approval hurdles, valuation gaps and Tesla’s latest results

The article says Musk controls about 82% of SpaceX’s voting power through a dual-class share structure, even though he owns roughly 48% of the equity. It says his Tesla stake is about 20%. Penn Carey Law professor Jill Fisch is quoted as saying SpaceX’s governance gives Musk “a tremendous amount of control,” and the article says he has indicated he would want that control structure to carry into any combined company.

Latin Times reports that Tesla posted third-quarter results on October 21, one day after the committee announcement, and that the numbers beat expectations. The company reported positive free cash flow of $1.53 billion, compared with Wall Street’s expectation of negative $4.92 billion. Non-GAAP earnings were $0.48 per share, above the consensus range of $0.43 to $0.45. Revenue was $28.05 billion, about unchanged from a year earlier. Even so, Tesla shares fell more than 3% after hours as investors focused on a 56% drop in operating income and higher costs tied to AI and robotics spending.

The article says a merger would also raise structural concerns for Tesla investors. Tesla shares are down about 17% in 2026, and a deal priced at SpaceX’s higher valuation could dilute Tesla shareholders while directing Tesla capital toward SpaceX’s larger spending plans. Investor Gary Black of The Future Fund said, according to the article, that fair terms are hard to design because Tesla trades at about 200 times forward earnings while SpaceX is around 400 times. Latin Times says that makes the exchange ratio a major point of contention.

Shareholder votes and what remains open

Musk said both shareholder groups would need to approve any deal. On the Tesla side, the article says the threshold is approval from 50% of all outstanding shares, not merely a majority of votes cast. It also notes that Gene Munster of Deepwater Asset Management had previously put the odds of a combination at 90% after Tesla’s second-quarter earnings call in July, but that estimate now sits alongside a formal committee process.

According to Latin Times, the key unresolved questions are whether the committees reach terms, whether those terms match Musk’s preferences, and whether Tesla shareholders approve the deal. The article says independent directors at both companies are now formally examining what could become the largest corporate transaction ever considered.