Musk merges SpaceX and xAI, creating $1.25 trillion entity
What's the story
Elon Musk's space exploration company, SpaceX, has acquired his artificial intelligence (AI) start-up, xAI. The deal is one of the biggest tech mergers to date. It combines a space-and-defense contractor with an ambitious AI developer. The merger could also give SpaceX an edge over competitors like Google's Alphabet, Meta, Anthropic, and OpenAI in the AI race.
Financial details
Deal values SpaceX at $1T, xAI at $250B
The deal values SpaceX at $1 trillion and xAI at $250 billion, according to reports. As part of the acquisition, xAI investors will get 0.1433 shares of SpaceX for each share they own in xAI. Some executives from xAI may also choose cash instead of SpaceX stock at $75.46 per share.
Future prospects
Acquisition now officially largest M&A deal in history
Musk said, "This marks not just the next chapter, but the next book in SpaceX and xAI's mission: scaling to make a sentient sun to understand the Universe and extend the light of consciousness to the stars!" The acquisition is now officially the largest M&A deal in history, surpassing Vodafone's $203 billion takeover of Germany's Mannesmann in a hostile takeover back in 2000.
Market strategy
Combined company expected to price shares around $527 each
The combined company is expected to price its shares at around $527 each. SpaceX was last valued at $800 billion in an insider share sale, making it the world's most valuable private company. xAI was last valued at $230 billion in January. The merger comes as SpaceX plans a blockbuster public offering this year that could value it at over $1.5 trillion.
Business consolidation
Musk's growing business empire faces potential regulatory scrutiny
The deal further consolidates Musk's far-flung business empire into a tighter ecosystem, informally dubbed the "Muskonomy." This already includes Tesla, brain-chip maker Neuralink, and tunnel firm the Boring Company. However, the agreement could face scrutiny from regulators and investors over governance issues due to Musk's overlapping leadership roles across multiple firms.