Business & Economy
Tesla and SpaceX open formal review of possible merger
Musk’s overlapping control now faces independent directors and shareholder approval.
Musk’s overlapping control now faces independent directors and shareholder approval.
Tesla and SpaceX have begun a formal review of a possible after investors asked both companies to form committees of directors with no ties to Elon Musk. Musk runs both companies and owns large stakes in each. He supports combining them but cannot join the committee talks because his interests could conflict with other investors. He says no terms have been agreed and that a might never happen.
A could connect with SpaceX’s rockets, satellites and computing systems. Directors must decide how to value, fund and control the combined company while protecting smaller investors from Musk’s influence in both firms. Tesla would need , not only those voted. could create another hurdle. No formal plan, government review or investor vote has been announced.
No formal merger agreement, regulatory review, shareholder vote or final committee recommendation had been announced. Any proposal would still face Tesla’s all-shares approval requirement, , and possible scrutiny of Musk’s overlapping control.
The committees must consider the terms of any potential transaction, including , ownership, financing and governance, before a deal could proceed.
Tesla and SpaceX formed to discuss a potential merger at shareholders’ request. No transaction terms have been agreed, and no deal is guaranteed.
Musk said Tesla would face a high approval hurdle, requiring support from rather than merely a majority of shares voted. That rule makes participation by nonvoting or otherwise disengaged shareholders especially important.
Musk cautioned investors not to treat the merger as certain. He said the committees had not reached agreement on the terms of any transaction and that shareholders would ultimately have to support whatever proposal emerged.
Elon Musk said a combination could be a good idea, while identifying himself as a because he is CEO and a major shareholder of both companies. He said he could not participate in the special committees’ discussions, leaving independent directors to evaluate the proposal.
At shareholders’ request, the boards of Tesla and SpaceX created special committees made up of independent directors to discuss a possible combination. The move began a formal review, but neither company had agreed to transaction terms or committed to a deal.