Tesla, SpaceX Form Independent Committees to Weigh $3.5 Trillion Merger, Musk Says

Independent directors at Tesla and SpaceX have formed special committees to evaluate a possible merger, Elon Musk told investors Tuesday during SpaceX's third-quarter earnings call. Musk, who is conflicted as CEO of both companies, said he cannot participate in the discussions and that no terms have been agreed upon. "Some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it," he said. At Tuesday's closing prices, a combined entity would be valued at about $3.5 trillion—SpaceX at roughly $2 trillion and Tesla near $1.5 trillion. Musk owns about 20% of Tesla and 45% of SpaceX, controlling about 82% of voting power at the latter. He said any Tesla-side approval would require backing from a majority of all outstanding shares, calling it "quite a high hurdle." Tesla's Monday proxy filing does not include a merger proposal, though it confirmed a $2 billion Tesla investment in SpaceX. Shares of Tesla rose just over 1% after hours; SpaceX gained more than 5%. SpaceX posted its first operating profit since its June IPO, with third-quarter revenue up 161% to $14.58 billion, beating the $12.86 billion analyst consensus. Net income was $4.4 billion.