"Musk's Next Move: Merger of SpaceX and Tesla"

Experts Say: "If Musk Is Determined, It's Hard to Stop"

"Following SpaceX's largest-ever initial public offering (IPO), it is anticipated that an 'Elon Musk Corporation' could emerge through a merger with Tesla."

The New York Times (NYT) analyzed and reported on June 17 that this is a growing view on Wall Street. According to the NYT, SpaceX and Tesla have long shared executives and resources, and have jointly pursued key artificial intelligence (AI) projects such as Terafab and Macrohard. Earlier this year, Tesla also invested in xAI, the AI company founded by CEO Elon Musk, which merged with SpaceX, and over the past two years, Tesla has sold hundreds of millions of dollars worth of batteries and vehicles to SpaceX. In a recent interview with CNBC, Gwynne Shotwell, President of SpaceX, did not deny the merger rumors and stated, "Looking to the future, it is clear that there are synergies between the two companies."

SpaceX logo. Photo by Reuters and Yonhap News Agency

Experts predict that if the two companies merge, the larger company by market capitalization, SpaceX, would likely exchange Tesla shares for its own stock. Under Texas law, two-thirds of Tesla shareholders must approve the merger. CEO Musk already holds about 20% of the voting rights. Many shareholders have strong confidence in CEO Musk, as evidenced by their approval of a $1 trillion compensation package for him. Several members of Tesla's board also serve on the board of SpaceX, and many have longstanding relationships with CEO Musk. From SpaceX's perspective, the merger would only require approval from CEO Musk, who controls 82% of the total voting rights.

However, since CEO Musk controls SpaceX and is also the largest shareholder in Tesla, there are concerns that a merger would essentially amount to him transacting with himself. The NYT pointed out that this could prompt legal disputes, as it may undermine the interests of other shareholders. Eric Talley, a professor at Columbia Law School, noted that if the acquisition terms are excessively favorable to SpaceX, Tesla shareholders may push back.

Legal experts believe that, despite any legal actions, it would be difficult to block the merger if CEO Musk is determined to pursue it. Under the current corporate law in Texas, where both Tesla and SpaceX are headquartered, investors must hold at least a 3% stake to challenge management decisions. Typically, only large investment firms meet this threshold. Even if minority shareholders band together, they would need to collectively own $45 billion worth of Tesla shares, based on Tesla's market capitalization of approximately $1.5 trillion, making it a daunting task.

Regulators could theoretically raise antitrust concerns on the grounds that both companies are engaged in AI businesses, or cite national security issues. However, Professor Talley sees little likelihood that the Trump administration would oppose the deal. While the NYT identified stock price declines as the biggest obstacle to a merger, even this seems unlikely at present. Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, stated, "In a bull market, everyone is making money, so people are generally satisfied."

This content was produced with the assistance of AI translation services.