Tesla (TSLA.US) CEO Elon Musk is planning to facilitate a merger between space exploration company SpaceX and artificial intelligence startup xAI, aiming to consolidate resources to support his increasingly expensive expansion ambitions in the AI and aerospace sectors. The related transaction was announced internally via a memo on Monday but has not yet been made public.
The merged company is expected to be priced at approximately $527 per share, with an overall valuation that could reach as high as $1.25 trillion. SpaceX and xAI have not yet responded to requests for comment.
This transaction will bring two of the world's largest privately held companies under a single corporate structure. Reports indicate that xAI was valued at around $230 billion in a funding round this past January, while SpaceX was previously valued at approximately $800 billion ahead of a planned share sale last December and is exploring the possibility of an initial public offering (IPO).
Media reports have previously indicated that SpaceX had also discussed a potential merger with Tesla. This deal further intertwines the various components of Musk's business empire.
Musk acquired Twitter at the end of 2022, renaming it X, and subsequently merged X with xAI in a deal valued at $33 billion. xAI currently operates the chatbot Grok, but its operations are capital-intensive, reportedly "burning" about $1 billion per month in pursuit of its goal to achieve a "deeper understanding of the universe."
Insiders note that merging with SpaceX would help xAI gain access to more capital, talent, and computing resources, while also potentially advancing Musk's proposed concept for "space-based AI data centers." According to a filing last Friday, SpaceX is applying for permission to launch up to 1 million satellites into Earth's orbit for this project.
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