Tech billionaire Elon Musk on Tursday said a merger between his two companies, SpaceX and Tesla, would be a “good idea” and that they had formed special committees to discuss the matter — confirming speculation of a possibly union.
“I think it would be a good idea, but it’s really up to the special committees of both companies,” Musk said.
“Because I’m a conflicted party, I can’t actually be in the discussions of the special committees,” which was comprised of independent directors, he told investors on a conference call.
Shares of the space tech company rose 8% in trade over Musk’s comment, while Tesla’s shares rose 1.8%. The space tech company had earlier posted its first profit as a public company.
About that, Musk said he expected an annual recurring revenue between $500 billion and $1 trillion by the end of 2027as demand for its data enter space surges and the AI boom.
Merger not a given
This is not the first time Musk has publicly spoken about a merger between his auto-making and rocket-making companies.
Speculation about a possibly merger gained traction recently with Barclays suggesting that a deal could be announced before Tesla’s annual meeting in December.
Musk told investors that the special committees has been formed at the request of shareholders who would ultimately need to approve a deal. At least 50% of Tesla shareholders would have to approve a deal for it to go through.
“I do think there’s a lot of merit to combining the companies as we are pretty much in the superintelligence singularity, and there’s a lot to be gained from cooperating on developing superintelligence software, chip design, the Terafab obviously, robotics, mass-to-orbit with the Starmind constellation, connectivity,” he said.
He added a disclaimer that it would be premature to assume a merger would happen.
What investors are saying
“Going into this, I’d have said there’s a 90% chance that something happens in the next two years. It’s a 95% chance, I think, now. It might even be in the next year. But clearly there is momentum around this internally and I think that ultimately it does happen,” said Gene Munster, Managing Partner at Tesla Investor Deepwater Asset Management.
Justus Parmar, Chief Executive Officer at Frotuna Invesments said there was another benefit to the deal apart from having all of Musk’s companies in one place for investors to back.
“Tesla runs a high-margin, cash-generative automotive business and there’s more growth to come with the robotaxis on the way. That cash flow could help support SpaceX’s bottom line and fund its very capital-intensive space exploration and launch goals, including orbital data centers,” he said.
Edited by: Kieran Burke
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Source: www.dw.com
