SpaceX and Tesla form special board committees to weigh a merger

SpaceX and Tesla’s boards have each formed special committees made up of independent directors to review a possible merger between the two companies, at the request of shareholders, according to Elon Musk, who is CEO and the largest individual shareholder of both. Musk, who says he’s caught in a conflict of interest and can’t take part in the committees’ discussions himself, described the arrangement as “an odd kabuki dance where two groups of people are talking, and I can’t be in the conversation.”

Musk didn’t name the committee members, but Tesla’s board includes seven independent directors under Nasdaq’s rules — among them chair Robyn Denholm and Ira Ehrenpreis, who also chairs another committee — while Musk and his brother Kimbal Musk are not considered independent, according to the company’s October 19 proxy filing. SpaceX’s board lists six independent directors, including Ehrenpreis, who also chairs its compensation and nominating committee; the non-independent members are Musk, president and COO Gwynne Shotwell, and Antonio Garcias, who runs Valor Equity Partners — a firm holding a 3.4% stake in SpaceX and has also helped bankroll the company’s AI-hardware purchases through leaseback deals.

Musk said he backs the merger idea but doesn’t see it as guaranteed, cautioning that a deal is harder to assume than some people think and that it ultimately depends on shareholder support. He noted that SpaceX’s own IPO left him with more than 50% of the company’s voting power, making shareholder approval there comparatively easy, while Tesla’s bylaws require support from a majority of its entire shareholder base, not merely those who show up to vote — a much steeper bar. The special committees haven’t yet agreed on any transaction terms, Musk said, though he argued the companies have a lot to gain from combining efforts on AI software, robotics, SpaceX’s orbital data-center project Starmind, and Terafab, the companies’ joint chip-manufacturing venture.

Why it matters

A SpaceX-Tesla combination would fuse Musk’s AI, robotics, and compute ambitions across two public and soon-to-be-public entities — but the structural mismatch between SpaceX’s concentrated voting power and Tesla’s broader shareholder base means the deal’s fate may hinge more on Tesla investors than on SpaceX’s.