Oct 21 (Reuters) – Elon Musk said on Tuesday that a merger of his two companies, SpaceX and Tesla, would be “a good idea” and that they had formed special committees to discuss a union.
The news sent shares of the space and technology company up 8% in extended trading.
This is what people are saying about the proposed merger:
JOSH GILBERT, LEAD ANALYST FOR APAC, e-TORO:
“A Tesla tie-up would be the largest merger the market has ever seen, bringing together two companies worth around $3.5 trillion combined, and the logic is easy to follow given how much of both businesses now runs on AI. The hurdle for this is going to be high, and even with Musk stepping back from the committees, a deal where one man runs both sides will draw tough questions on governance.
“For investors, a deal would put the entire Musk universe under one ticker, bringing AI, robotics, EVs and space exploration together, and that’s a lot of eggs in one very ambitious basket.”
JUSTUS PARMAR, CEO, FORTUNA INVESTMENTS:
“A merger would create a single entity for investors who want to back Elon Musk, with virtually all of his companies in one place. It would also avoid redundancy and the time he spends going back and forth between two entities, and there would be a reduction in public company overhead, legal costs, and administrative burdens.”
“Another benefit I’d highlight is that Tesla runs a high-margin, cash-generative automotive business, and there’s more growth to come with the robotaxis on the way. That cash flow could help support SpaceX’s bottom line and fund its very capital-intensive space exploration and launch goals, including orbital data centers.”
MICHAEL MONAGHAN, PORTFOLIO MANAGER, FOUNDER ETFs:
“Governance: We believe founders should control their companies. We have no fundamental governance concerns. SpaceX has access to the best legal counsel money can buy and operates under extraordinary scrutiny. As Elon made clear on today’s call, the independent committees will follow both the letter and the spirit of the law.
“National Security: Given SpaceX’s role as a critical US defense contractor, Tesla’s China operations may need to be formally separated or subject to strict operational and information firewalls to address national security concerns.”
DANIEL NEWMAN, CEO, THE FUTURUM GROUP:
“The merger has been inevitable pretty much since the announcement of the SpaceX IPO … Bottom line is the two companies bring together Space, AI, Autonomy, and Robotics and would be arguably the most well positioned company on the planet for what comes next.”
BRIAN MULBERRY, CHIEF MARKET STRATEGIST, ZACKS INVESTMENT MANAGEMENT:
“It’s a known possibility of a merger and it seems that each company is building the case on existing synergies which would then lead to greater efficiencies in the future.
“It would still be subject to votes from each shareholder community, but it seems like things are headed that way as Elon mentioned it twice on the call just now.”
YURI KHODJAMIRIAN, CHIEF INVESTMENT OFFICER, TEMA ETFs:
“In our view the combination makes sense – it brings together everything under one roof and the companies are already working on major joint projects, e.g. Terrafab.
“We think the special committees are a good step and it looks like a good effort is being made to address the governance challenges.”
(Reporting by Abhirup Roy and Akash Sriraj; Compiled by Anne Marie Roantree; Editing by Sonali Paul)
