Elon Musk's SpaceX-Tesla mega merger could be announced in December: What could derail the deal?
Elon Musk's SpaceX and Tesla Inc are progressing in merger negotiations, and the two companies could announce what would become the world's biggest-ever corporate deal as early as December, Bloomberg reported.
The discussions could also extend into early 2027, depending on how negotiations progress. The boards and advisers of both companies are working out the terms of the proposed combination, including the governance structure of the merged entity, according to the report.
The proposed merger would bring Musk's electric vehicle, energy storage, rocket and satellite businesses under one corporate umbrella. The rationale for the combination is reportedly centred on the companies' shared ambition to expand the use of artificial intelligence across areas such as space operations, autonomous vehicles and humanoid robots.
The proposed combination could face regulatory and operational hurdles, particularly because of the companies' contrasting business interests in the US and China.
One of the key issues under discussion is how Tesla's operations in China would be ring-fenced, Bloomberg reported.
SpaceX has sensitive contracts with the US government and defence establishment, while Tesla has a substantial and profitable manufacturing presence in China. These interests could complicate regulatory and shareholder approvals for a merger.
JPMorgan analyst Rajat Gupta had described the national security considerations surrounding the two businesses as "key dynamics that are at odds with each other" in a research note to clients last month, according to Bloomberg.
The deal could also face political scrutiny in the US. The proposed merger would come after the November midterm elections, in which Democrats gained control of Congress. Democratic lawmakers have pledged to investigate Musk's business and political dealings, adding another layer of uncertainty to the transaction.
Musk said in October that the boards of both companies had formed special committees comprising independent directors to examine the possibility of a combination.
The companies are also discussing how many shares SpaceX would need to offer Tesla shareholders as part of the transaction, Bloomberg reported.
The two businesses already have commercial links. These include a joint effort to build a semiconductor manufacturing facility in Texas, known as Terafab. Both companies have also been laying the groundwork for greater operational collaboration.
SpaceX, formally known as Space Exploration Technologies Corp, went public in June in a landmark listing in New York. Bloomberg reported that the company had a market value of more than $1.9 trillion following its initial public offering, while Tesla was valued at around $1.5 trillion.
Tesla is scheduled to hold its annual shareholder meeting on December 3.
Some reports also mentioned about the companies exploring an announcement by the first half of 2027, with the aim of completing the merger before the end of US President Donald Trump's term. The latest discussions indicate that an announcement could come sooner, potentially in December, although the timeline remains uncertain.
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