A rumored merger of Musk’s two most valuable companies — SpaceX and Tesla [NASDAQ: TSLA] — could be just weeks away, Levy shared with Investor’s Business Daily, adding that the reported “megadeal” could be announced before Tesla’s annual meeting, which should take place in early December. As Levy explained, this timing would give Tesla shareholders the opportunity to vote on the potential merger at the annual meeting.
“The merger would likely be pitched as an AI vertical integration play,” said Levy, according to Investor’s Business Daily. “Combining the physical AI aspects of Tesla (i.e., Robotaxi, Optimus) with the virtual AI aspects of SpaceX (i.e., Grok, Macrohard).”
Since the SpaceX IPO, speculation on Musk’s potential to consolidate his business empire has been growing steadily. And if he decides to do so, such a move could trigger a clause in his Tesla contract that would accelerate a massive $1 trillion payday package, according to The Wall Street Journal.
A line buried in the contract, at the bottom of the fifth page, declares half of the targets Musk previously had to meet in order to earn the payout would be considered met if Tesla is acquired or taken over.
A longshot gets a lot closer
Musk reportedly lobbied for the $1 trillion pay package and even indicated he could leave the company if it wasn’t approved. Still, the package was once seen by many as a long shot of ever being realized.
The agreement was made up of 12 tranches of shares to be granted to Musk if Tesla hit certain milestones in the next decade. The first of those required Tesla to hit a market capitalization of $2 trillion — the company currently has a market cap of $1.46 trillion. The next nine tranches see Musk earning more stock each time Tesla’s value increases by $500 billion, up to $6.5 trillion.
The final two tranches require market cap rises of $1 trillion each, which means Tesla would need to hit a market cap of $8.5 trillion for Musk to get the full package.
The Wall Street Journal laid out a SpaceX offer that valued Tesla at a 54% premium, making this potential merger a $2 trillion deal. In an all-stock deal, Tesla shareholders would reportedly receive 3.8 shares in the combined company for each share they own.
Musk, meanwhile, would retain complete operational control of both companies. His Class B shares have 10 times the voting power of publicly traded Class A shares, giving him 73% of the voting power at SpaceX. Even if the deal values Tesla at a whopping $8.5 trillion, Musk would retain 56% of the voting power.
