SpaceX Filing: Any Tesla Merger Needs Musk’s Approval — Despite His Recusal

SpaceX said on October 22 that its potential merger with Tesla will require controlling investor Elon Musk’s approval, even though he has recused himself from the talks because of conflicts of interest, Reuters reported. In a regulatory filing Thursday, SpaceX said: “No determination by our special committee has been made regarding any potential combination, and any potential combination would be subject to further approval by our special committee, our board of directors and our controlling shareholder.”

The disclosure follows Musk’s Tuesday comments calling a union “a good idea” and confirming special committees at both companies — and those very comments have created problems. Reuters reported that some insiders involved in the discussions worry Musk’s public endorsement could invite shareholder scrutiny and delay the process by several weeks, with one person calling it a “mess” for the process and raising questions about how well Tesla shareholders’ interests would be represented. The unease echoes Tesla’s 2016 SolarCity acquisition, which spawned years of litigation over Musk’s role.

The talks remain early. People familiar with the matter said SpaceX approached Tesla in recent weeks and the companies are weighing structures including a SpaceX acquisition of Tesla or a merger under a newly formed holding company, with an all-stock deal among the consideration options. Several Wall Street analysts see a merger as a matter of when, not if — but disagree sharply on how much Tesla shareholders should receive, and any combination would face significant regulatory hurdles.