- Published on
Tesla and SpaceX take first step towards merger, would dilute all shareholders
- Authors
- Name
- DeepHorus
Tesla and SpaceX have each formed special committees of independent board members to explore a potential merger, Elon Musk announced during SpaceX's quarterly earnings call. Musk serves as CEO of both companies. The call came just months after SpaceX's initial public offering and marked its second quarterly report as a public company.
A merger between the two firms has been rumored for years. Musk has repeatedly criticized Tesla's public status, complaining about the need to respond to shareholder concerns. Yet he took SpaceX public despite those long-standing objections. The committees represent the first formal step toward combining the companies.
Musk's primary motivation appears to be control. After the restoration of his pay package, his Tesla ownership stands at roughly 22%. He wants total control. To that end, he has proposed massive compensation packages tied to ambitious milestones, including a million robots, a million robotaxis, and a million colonists on Mars.
However, the pay packages include a provision that automatically delivers the shares in the event of a merger, regardless of whether those milestones are met. This means Musk would receive his stock even if no robots or Mars colonists materialize. Other shareholders would see their stakes diluted.
The implications extend beyond Tesla and SpaceX investors. A merger could dilute the retirement savings of anyone with exposure to major stock indices. The deal would create new shares for Musk, reducing the value and voting power of existing shares.
The 'independent' board members reviewing the proposal are expected to side with Musk, given Tesla's board history of prioritizing his interests. The merger is not guaranteed; committees must first agree. If approved, it would mark a significant consolidation of Musk's business empire. The review process is still in its early stages.
