Tesla and SpaceX explore merger as Musk backs closer ties

Tesla and SpaceX have established independent board committees to examine a possible merger, Elon Musk said during SpaceX's October 20 earnings call. Musk supports combining the businesses but said an agreement is uncertain.

Musk said shareholders requested the discussions and that the committees had not settled transaction terms. He also said his conflicting interests prevent him from participating in their negotiations. Tesla separately disclosed that its board committee is considering several ways to strengthen its relationship with SpaceX, including a business combination.

Musk linked his support to opportunities for cooperation in artificial intelligence, semiconductor design, robotics and satellite infrastructure. He also identified Terafab as an area of shared work. These were his arguments for a combination, rather than commitments under an agreed transaction.

The committees must determine whether they can recommend a deal before it moves toward shareholder approval. Tesla cautioned that any transaction would require its committee's recommendation and any necessary shareholder consent. Its disclosure does not guarantee that a combination will happen.