Billionaire Bill Ackman has proposed taking SpaceX public through his specially created Special Purpose Acquisition Rights (SPARC) vehicle, an innovative structure that would circumvent traditional IPO procedures while granting Tesla Motors shareholders priority investment rights.
Ackman stated on social media platform X that this structure would distribute SPARs to Tesla shareholders, allowing them to either invest directly in SpaceX or monetize their rights. The proposal aligns with Elon Musk's previous remarks at Tesla's November shareholder meeting, where he expressed interest in giving Tesla supporters access to SpaceX investment opportunities.
Under Ackman's plan, each Tesla share would receive 0.5 SPARs, totaling approximately 1.723 billion SPARs. Each SPAR would be convertible into two SpaceX shares, implying an aggregate of 3.446 billion shares. This structure eliminates underwriting fees, founder shares, and shareholder warrants while maintaining a 100% common stock capital structure.
Recent rumors suggested SpaceX was seeking funding at an $800 billion valuation, which Musk denied. Reports indicate SpaceX is preparing for a potential IPO that could reach $1.5 trillion, dwarfing major aerospace competitors.
Transaction Structure: Eliminating Traditional IPO Costs
Ackman's proposal involves merging SpaceX with his SEC-approved Pershing Square SPARC Holdings vehicle. The plan would generate about 1.723 billion new SPARs in addition to the existing 61.1 million SPARs. The key innovation lies in completely removing underwriting fees, founder shares, and shareholder warrants, with Pershing Square also waiving its sponsor warrants.
This 100% common stock structure avoids complex equity arrangements common in traditional IPOs. Ackman aims to complete due diligence and final agreements within 45 days, targeting a mid-February transaction announcement.
Funding Scale: Potential to Raise $148.7 Billion
The proposal offers significant funding flexibility. At an $11.03 exercise price, SpaceX could raise approximately $42 billion, with $38 billion coming from SPAR exercises and $4 billion from Pershing Square. Increasing the exercise price to $42 could boost total proceeds to around $148.7 billion.
This funding scale aligns with SpaceX's market expectations. The potential $1.5 trillion IPO valuation would far exceed competitors like Boeing and Lockheed Martin. Ackman added incentive provisions where SPAR-exercising investors would receive rights in Pershing Square SPARC Holdings II, potentially offering future access to Musk's AI venture xAI.
Comments