Tesla Requires Support from 50% of Its Shares for Potential SpaceX Merger
Key Facts
Elon Musk said any potential deal between Tesla and SpaceX would require votes in favor representing 50% of all Tesla shares, not 50% of shares that are voted. That makes the number of shares supporting the deal, measured against all shares outstanding, the basis for approval regardless of turnout. The two companies are considering deepening their relationship, which could include a merger. But the special committees formed by the companies’ boards have not agreed on the terms of any transaction. Musk said it would be an overstatement to consider a merger certain.
Analysts’ estimates of potential consideration for Tesla shareholders vary, and the figures in circulation do not represent a confirmed target price. JPMorgan and RBC analysts forecast a premium of between 20% and 35% for Tesla shareholders, while some analysts do not expect them to receive a premium. In a separate estimate, JPMorgan said a premium of between 30% and 35% to Tesla’s current market value could make the deal a merger of equals and keep Musk’s voting power above 50% in the combined entity. Those remain hypothetical calculations in the absence of final terms. Reuters reported that the stock-swap ratio has not been negotiated and that Tesla shareholders would exchange their standalone stakes for shares in Musk-controlled SpaceX. There is therefore no publicly disclosed basis yet for translating those premiums into a specific Tesla share value.
Governance and conflicts of interest are central to the deal review. The companies’ boards formed special committees of independent directors to examine a potential merger at the request of shareholders. Musk said he was a conflicted party and could not participate in the committees’ discussions. Tesla said in its regulatory filing that its committee was examining a deeper relationship with SpaceX, which could include a merger, while warning that there was no guarantee any transaction would be completed. SpaceX also said any potential combination would require approval from its special committee, board and controlling shareholder. The company added that there was no guarantee of reaching an agreement or completing a transaction. These procedures put negotiations and corporate approvals ahead of any discussion of executing a deal.
Regulatory approvals in China add another challenge to the potential deal calculations. JPMorgan said approval from Chinese regulators was the biggest hurdle, noting that China accounts for about 20% of Tesla’s revenue and a larger share of its earnings before interest and taxes and free cash flow. The bank raised the possibility of ring-fencing Tesla’s China business or transferring control to a China-based consortium that would own more than 50% of the stake, while Tesla continued to earn revenue through licensing. That remains a possible scenario, not an agreed structure. The issue shows that the shape of any deal, if it proceeds, could be affected by regulatory requirements and by how Tesla’s assets and revenue in the Chinese market are managed.
One potential economic argument for a combination is the bundling of artificial intelligence businesses and space infrastructure, but the required investment weighs on cash flows. Analysts said rising capital spending on AI and space infrastructure could weigh on SpaceX’s free cash flow, and that shared services and joint borrowing could ease the pressure. The Associated Press reported that the company’s capital expenditure was 19.6 billion dollars in the quarter ended in September, about three times its level a year earlier. The company expected spending to rise to 35–40 billion dollars in the fourth quarter to fund expansion, a range also reported by Reuters. On revenue, the Associated Press said the AI business became SpaceX’s largest by revenue in the third quarter, while Starlink remained its biggest profit generator.
The justification for the companies’ high valuations faces the challenge that some of the technologies underpinning those valuations have not yet reached commercial scale. Reuters noted that orbital data centers, robotaxis and humanoid robots had not reached that scale. In Wednesday, October 21 trading, Tesla shares rose more than 3% and SpaceX shares gained 11% as talk of a deal intensified. Tesla shares closed at 372.22 dollars and SpaceX shares at 147.49 dollars on October 23. Those market moves put the news in context but do not settle an exchange value or merger terms that have not been agreed.
Investors are focused on what regulatory filings will disclose ahead of Tesla’s annual meeting scheduled for December 3, 2026. Reuters said analysts were watching those filings, while the stock-swap ratio remained unnegotiated. The absence of a ratio means the consideration Tesla shareholders might receive has not yet been determined. Any transaction also remains subject to committee review and approval by the boards and relevant regulators. Until then, the premiums in circulation remain analytical scenarios, not announced deal terms.