WASHINGTON: Elon Musk said on Monday that SpaceX has acquired his artificial-intelligence startup xAI in a record-setting deal, unifying his AI and space ambitions by combining the rocket-and-satellite company with the maker of the Grok chatbot.
The transaction values SpaceX at $1 trillion and xAI at $250 billion, according to a person familiar with the matter, making it the largest merger-and-acquisition deal ever recorded.
The deal, first reported by Reuters last week, represents one of the most ambitious tie-ups in the technology sector, combining a space-and-defense contractor with a fast-growing AI developer whose costs are largely driven by chips, data centres and energy. The acquisition could also bolster SpaceX’s data-centre ambitions as Musk competes with rivals including Alphabet’s Google, Meta, Amazon-backed Anthropic and OpenAI.
Under the terms of the deal, investors in xAI will receive 0.1433 shares of SpaceX for every share of xAI, the person said. Some xAI executives may opt to receive cash instead of SpaceX stock at $75.46 per share.
“This marks not just the next chapter, but the next book in SpaceX and xAI’s mission: scaling to make a sentient sun to understand the universe and extend the light of consciousness to the stars”, Musk said in a statement.
The acquisition surpasses the previous record for the world’s largest M&A deal, set in 2000 when Vodafone acquired Germany’s Mannesmann for $203 billion, according to data from LSEG.
The combined company is expected to price shares at about $527 each, another person familiar with the matter said. SpaceX was last valued at $800 billion in a recent insider share sale, while xAI was valued at $230 billion in November, according to the Wall Street Journal.
The merger comes as SpaceX prepares for a potential public offering later this year that could value the company at more than $1.5 trillion, two people familiar with the matter said.
SpaceX, xAI and Musk did not immediately respond to requests for comment.
The deal further consolidates Musk’s business empire, which already includes electric-vehicle maker Tesla, brain-chip firm Neuralink and tunnel company the Boring Company. Musk has previously merged his ventures, including folding social media platform X into xAI last year and using Tesla stock to acquire SolarCity in 2016.
The agreement may draw scrutiny from regulators and investors over governance, valuation and conflicts of interest, given Musk’s overlapping leadership roles and the potential sharing of engineers, technology and contracts across companies.
SpaceX holds billions of dollars in US federal contracts with Nasa, the Department of Defence and intelligence agencies, which may review the transaction for national-security and other risks. — Reuters
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