SpaceX–Tesla merger: special committees at both companies begin talks

The boards of Elon Musk’s space company SpaceX and electric carmaker Tesla have each set up a special committee to examine whether the two should merge. Formed at shareholders’ request, the committees are made up of independent directors. No agreement has yet been reached on the terms.

Musk said the two committees are negotiating separately and that he cannot take part directly, calling it a somewhat unusual process.

Who sits on the boards

According to Tesla’s 19 October proxy filing, its board has seven directors who are independent under Nasdaq listing rules: chair Robyn Denholm, Ira Ehrenpreis, former chief technology officer JB Straubel, Joe Gebbia, Jack Hartung, James Murdoch, and Kathleen Wilson-Thompson. Musk did not say which of them sit on the special committee.

SpaceX has six independent directors: Ira Ehrenpreis, Randy Glein, Donald Harrison, Steve Jurvetson, Luke Nosek, and Roelof Botha. Ehrenpreis sits on both boards and chairs SpaceX’s compensation and nominating committee.

Tesla is the harder vote

Musk backs the idea but cautioned that it would be a stretch to assume a merger will happen. It could work well if it succeeds, he said, but shareholder support will be decisive.

Since SpaceX’s initial public offering, Musk’s control of the company has tightened; he now holds more than 50% of the voting power, so winning approval there should be easier. At Tesla, a majority of votes cast is not enough: according to Musk, a merger needs the backing of 50% of all shareholders.

Why Musk wants it

Musk argues that at this stage of artificial intelligence development, both companies would gain from working together. He points to AI software, robotics, Starmind (SpaceX’s project for AI data centres in orbit), and Terafab, a joint chip-manufacturing project between Tesla and SpaceX.