Musk’s Public Endorsement of SpaceX-Tesla Merger Rattles Insiders, Could Delay Talks by Weeks

Elon Musk’s public endorsement this week of a potential $3.5 trillion merger between SpaceX and Tesla has rattled some insiders involved in the discussions, who worry his comments could invite shareholder scrutiny and delay the process by several weeks, Reuters reported on October 22, citing a person with direct knowledge of the talks. The disclosure created a "mess" for the process, the person said, because it could raise questions about how well Tesla shareholders’ interests would be represented.

The concerns mirror Tesla’s 2016 acquisition of SolarCity, which sparked years of litigation over Musk’s role in the deal. The parties have hired advisers, but discussions are at an early stage, three sources told Reuters. SpaceX approached Tesla in recent weeks, and the companies have been discussing a range of transaction structures — including a SpaceX acquisition of Tesla or a merger under a newly formed holding company — and forms of consideration including an all-stock deal. These details had not been previously reported.

In related-party transactions like this one, independent board members typically oversee the process to safeguard public shareholders. Musk, CEO of both companies, told investors Tuesday that special committees of independent directors had been formed and that he could not participate as a conflicted party. When analysts pressed him on Tesla’s own earnings call Wednesday, Musk refused to engage: "I think I said everything that should be said yesterday. Tap dancing through a minefield there." Tesla, SpaceX and Musk did not respond to Reuters’ requests for comment.