SpaceX and Tesla Boards Set Up Special Committees to Weigh a Possible Merger
The boards of SpaceX and Tesla have each formed committees of independent directors to review a potential combination of the two companies. Elon Musk says he supports the idea but that it is not a certainty.
The boards of space company SpaceX and electric-vehicle maker Tesla have each created a special committee to review a possible merger of the two companies. The committees are made up of independent directors and were formed at shareholders' request, according to Elon Musk, who is CEO and the largest individual shareholder of both firms. He spoke during SpaceX's third-quarter earnings call.
Musk explained that as a conflicted party he cannot take part in the committees' discussions. He described the arrangement as an odd situation in which two groups talk while he stays out of the conversation. He did not name the committee members, saying only that they are independent directors. No agreement has been reached on the terms of any transaction.
Who sits on the boards
Tesla's October 19 proxy filing lists seven independent board members under Nasdaq listing standards: board chair Robyn Denholm, Ira Ehrenpreis, former Tesla CTO JB Straubel, Joe Gebbia, Jack Hartung, James Murdoch and Kathleen Wilson-Thompson. Neither Musk nor his brother Kimbal Musk is independent.
SpaceX lists six independent directors, including Ehrenpreis, who chairs its compensation and nominating committee. The others are Randy Glein, Donald Harrison, Steve Jurvetson, Luke Nosek and Roelef Boutha. Musk, SpaceX president and chief operating officer Gwynne Shotwell and Antonio Garcias also sit on the board but are not deemed independent. Garcias, a former Tesla director, founded and leads Valor Equity Partners, which holds a 3.4% stake in SpaceX and financed the company's AI hardware purchases through leaseback arrangements.
Hurdles and rationale
Musk said he supports a merger and considers it a good idea, but cautioned that it is not guaranteed. He said that assuming a deal is certain would overstate the case, and that shareholders must ultimately be supportive.
The SpaceX IPO strengthened Musk's control of that company, where he holds more than 50% of voting power, making it easier to win its shareholders' backing. Tesla is a bigger hurdle: Musk noted that a deal would need a vote of 50% of all shareholders, not just of those who vote.
As reasons for combining, Musk pointed to cooperation on AI software, robotics, SpaceX's orbital AI data center project Starmind, and Terafab, the joint chip manufacturing project of Tesla and SpaceX.
