NEW YORK, United States: Elon Musk’s public endorsement of a potential $3.5 trillion merger between SpaceX and Tesla has raised concerns among people involved in the negotiations, with fears that his remarks could trigger shareholder scrutiny and delay the process.
According to Reuters, Musk’s comments have complicated negotiations by raising concerns over whether Tesla shareholders’ interests would be adequately protected.
The concerns echo legal disputes surrounding Tesla’s 2016 acquisition of SolarCity, which faced years of litigation over Musk’s involvement.
Merger Talks at Early Stage
SpaceX recently approached Tesla about a potential combination, with both companies exploring several transaction structures, including SpaceX acquiring Tesla or merging under a new holding company.
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An all-stock transaction is also under consideration, although discussions remain preliminary.
Both companies have appointed advisers and established special committees to evaluate the proposed deal independently.
Musk, who leads both companies and holds substantial ownership stakes, has acknowledged that his conflicting interests prevent him from participating in committee negotiations.
Legal and Regulatory Challenges
Columbia University law professor Eric Talley said the merger could benefit shareholders by allowing Musk to concentrate on a combined business rather than divide his attention between two companies.
However, he warned that potential litigation would depend largely on the transaction’s terms.
Tesla’s incorporation in Texas also introduces legal uncertainty compared with its earlier Delaware-based disputes.
A completed merger would represent the largest corporate transaction in history.
It could face regulatory examination internationally, particularly because of Tesla’s Chinese operations and SpaceX’s involvement in US defence and artificial intelligence.
