Musk wants Tesla-SpaceX deal before Trump exits: Bloomberg

Elon Musk has given his public support to combining Tesla and SpaceX. He said both companies have set up special committees of independent directors to look at a deal, and he cautioned that a merger is far from certain. "Do I think it would be a good idea? Yes," Musk said on SpaceX's third-quarter earnings call on Tuesday, October 20, adding that "the special committees have not reached agreement on terms of any transaction and there's no guarantee that they will".theverge.com

According to Reuters, via Virginia Business, this was the first official confirmation that the companies were in formal talks. A person familiar with the matter told Reuters the discussions began in recent weeks and could lead to SpaceX acquiring Tesla.bbc.com

Why Musk Supports It

Musk runs both companies. He said the committees were formed at shareholders' request and that he is excluded from their talks because he is a "conflicted party". He said there is "a lot of merit to combining the companies as we are pretty much in the superintelligence singularity." He pointed to possible cooperation on AI software, chip design, robotics and connectivity.nbcnews.com+1

Bloomberg reported on Monday, October 26, that Musk wants to close the deal before President Donald Trump's term ends. Citing people familiar with the matter, Bloomberg said an announcement is being targeted for the first half of 2027.finance.yahoo.com+1

Wall Street Turns Bullish

Tesla shares rose about 5% on Monday and hit their highest level in more than three months after Barclays upgraded the stock to overweight. Barclays raised its price target to $450 from $370 and called the expected merger "a key part of the Tesla bull case". Bloomberg found that the share of sell ratings on Tesla has dropped to its lowest in more than 11 years. Last week, BNP Paribas and CLSA dropped their bearish calls. Dan Ives of Yorkville Ives puts the chance of a merger by the end of 2027 at 80% to 90%.bloomberg.com+2

Votes and Regulators

On the Tesla side, a deal needs approval from a majority of all outstanding shares, not just the shares that are voted. Musk called that "quite a high hurdle." He controls about 85% of SpaceX's voting power but only about 20% at Tesla. JPMorgan analyst Rajat Gupta sees approval from China as the biggest obstacle. He pointed to Tesla's Shanghai factory, SpaceX's U.S. defense ties, and the fact that Starlink has never been approved to operate in China.finance.yahoo.com+1

Reuters analysis found that Musk's ties to Trump may ease U.S. regulatory concerns. However, competition authorities in China and South Korea could look closely at whether Tesla would gain an unfair advantage from access to SpaceX technology. Analysts at William Blair argued that the push is "all about control".usnews.com+1