On the day of SpaceX’s highly anticipated IPO, president Gwynne Shotwell hinted at a move many analysts increasingly expect—that Elon Musk’s two public companies will someday merge to form a Musk empire.
As SpaceX makes history with its IPO Friday, Shotwell noted that combining Musk’s two public companies may not happen in the near term: “Right now I’m focused on keeping the lights on here.”
The Tesla bull sees more than an 80% chance they will merge. Part of the reason is that the two companies have already started laying the groundwork for a potential tie-up.
“Historic moment for Musk, the markets, and SpaceX. Watershed event,” Ives added in a comment to Fortune.
Yet Tesla’s stake could rise in value in the coming days, especially as analysts predict that the company’s stock price is set to skyrocket even higher.
Merging Tesla and SpaceX could create one of the biggest companies in the world. Already, SpaceX’s valuation of more than $2.3 trillion makes it the seventh largest company in the world by market cap and one of only 14 other companies worth more than $1 trillion.
A merger between the two companies is unlikely to face major regulatory hurdles, experts told CNBC, partly because they operate in separate industries. Yet the complex governance issues—like deciding which company would be the parent, who would determine the price of the new company’s shares, as well as the details of a stock swap—would all need to be tackled.
Because of Musk’s 85% voting power at SpaceX, he would not have to worry about pushback from the rocket company’s board. While Musk holds a lower 13% stake in Tesla, a giant pay package approved by shareholders in November would boost his ownership stake in the EV maker to around 25%, if he hits a series of ambitious financial and operational targets over the next decade.
“The company would not collapse, obviously, without Elon, but it would by no means be the same,” she said.
