SpaceX, Tesla eye December merger deal, Bloomberg says

SpaceX and Tesla ↗ 1.69% have made progress in merger negotiations, and the two Elon Musk-led companies could announce what would be the largest deal ever as soon as December, Bloomberg reported on Thursday, citing people familiar with the matter. The companies have also discussed the announcement slipping into early 2027. Their boards and advisers are negotiating the terms of the deal and the governance structure of the combined company, according to the report.news.bloomberglaw.com+1

Neither company could be reached for comment, Reuters noted. Musk called the merger a "good idea" last month. It would put his AI, robotics, electric vehicle and aerospace businesses under one corporate roof.channelnewsasia.com

Terms and timing

One open question is how many SpaceX shares Tesla investors would receive, Investing.com reported. That suggests SpaceX would absorb Tesla rather than the other way around. SpaceX has been valued at more than $1.9 trillion since its June IPO, and Tesla at about $1.5 trillion, so the combined company would be worth more than $3.4 trillion. For comparison, the long-standing record for a single deal is Vodafone's ↘ 0.96% $183 billion takeover of Mannesmann in 2000, Electrek noted. Tesla shares rose on the report.finance.yahoo.com+1

Tesla's annual shareholder meeting on December 3 could serve as a window for an announcement, Seeking Alpha reported. The ballot is limited to re-electing Musk, chair Robyn Denholm and JB Straubel, plus a say-on-pay vote and ratification of the auditor, according to Electrek. Both boards have formed special committees to explore a merger.electrek.co+1

China, defense and Washington

A main obstacle is how to ring-fence Tesla's China business from SpaceX's US government and defense contracts, Bloomberg reported. In a client note, JPMorgan ↘ 0.17% analyst Rajat Gupta described the two factors as "key dynamics that are at odds with each other" for regulators and shareholders, Electrek reported. Tesla's Shanghai factory builds more than half of its cars. In July, The Wall Street Journal News Corp ↘ 2.54% reported that Tesla was weighing a sale or spinoff of its China operations, which Musk denied.theverge.com+1

Politics adds more uncertainty. Democrats won control of Congress in the midterms and have pledged to investigate Musk's business dealings and political ties, Seeking Alpha noted. The new Congress does not take office until January, and Bloomberg previously reported that the companies want to close the deal before President Trump leaves office, according to Electrek.electrek.co+1

Governance is another sensitive point for Tesla investors. Musk owns about 20% of Tesla but controlled roughly 85% of SpaceX's voting power through super-voting shares, according to SpaceX's S-1 filing, Electrek reported. No final agreement has been reached, and the December timetable remains tentative, Investing.com noted.finance.yahoo.com+1