Tesla and SpaceX form committees to explore a merger, Musk says

Tesla and SpaceX have formed committees of independent directors to discuss a possible merger, Elon Musk said during SpaceX’s third-quarter earnings call on October 20. The move puts a potential combination of the two companies he leads under formal consideration, but the committees have not agreed on transaction terms and a deal is not assured.

Musk said he cannot serve on either committee. Business Insider reported that he owns billions of dollars in shares of both companies. He told the call he thought a merger would be a good idea, while stressing that shareholders would have to support it.

Tesla shareholder vote would be a high hurdle

The Verge reported Musk’s warning that the committees had reached no agreement on the terms of any transaction and might never do so. His comments establish that directors are considering a merger; they do not amount to an announced deal.

Investor questions preceded the earnings call

Interest in a combination was visible before Musk’s announcement. Reuters reported that a question asking when SpaceX would merge with Tesla was the second-most upvoted submission to SpaceX management ahead of the earnings webcast, with 26 upvotes. The same question had 128 upvotes on Tesla’s investor-relations site. Those submissions showed investor interest, though they did not establish that either company had decided to pursue a transaction.

Reuters also reported that Barclays had suggested the previous week that a deal could be announced before Tesla’s December 3 annual meeting, with SpaceX the likelier acquirer. That was an analyst’s suggestion made before the call, rather than a timetable or structure announced by either company. Musk’s account of the committees left the potential transaction at the discussion stage.