The boards of SpaceX and Tesla have established special committees to examine a possible merger between the two companies.
The committees comprise independent directors and were formed following requests from shareholders, according to Elon Musk, who leads both companies and is their largest individual shareholder.

The move represents an important step towards evaluating a transaction that could combine their interests in electric vehicles, artificial intelligence, robotics and space technology.

Musk explained that he would not participate in the committees’ discussions because of his potential conflict of interest.

He described the arrangement as unusual but necessary to allow independent directors to assess the proposal. Neither company has disclosed the full membership of its special committee.

Tesla has seven independent directors under Nasdaq listing standards, including board chair Robyn Denholm, Ira Ehrenpreis, JB Straubel, Joe Gebbia, Jack Hartung, James Murdoch and Kathleen Wilson Thompson.

SpaceX has six independent directors, including Ehrenpreis, Randy Glein, Donald Harrison, Steve Jurvetson, Luke Nosek and Roelof Botha.
Other members of the SpaceX board, including Musk, his brother Kimbal Musk, Antonio Gracias and company president Gwynne Shotwell, are not considered independent.

Gracias also leads Valor Equity Partners, an investment firm that holds a stake in SpaceX and has financed some of the company’s artificial intelligence hardware purchases through leaseback arrangements.

Musk said he supports the proposed merger but warned that it should not be regarded as inevitable.

He stressed that the special committees had not reached an agreement on the terms of any transaction and that shareholder approval would be essential.

SpaceX’s ownership structure could make approval easier because Musk holds more than 50 per cent of its voting power.

Tesla presents a greater challenge because the proposal would require support from shareholders representing at least 50 per cent of the company’s outstanding shares, rather than simply half of the shareholders who participate in the vote.

Despite the uncertainty, Musk believes combining the companies could create significant advantages as artificial intelligence, robotics and advanced computing continue to develop.

He highlighted opportunities for cooperation in AI software, robotics, SpaceX’s proposed orbital data centre project, Starmind, and Terafab, a joint chip manufacturing initiative involving Tesla and SpaceX.

However, the potential benefits remain subject to further evaluation by the committees and the approval process required for any merger.

Source: TechCrunch