A SpaceX regulatory filing indicates that Elon Musk could retain decisive authority over any proposed merger with Tesla, despite having recused himself from the special committees reviewing the transaction.
SpaceX filing highlights Musk’s control
SpaceX’s October 22 quarterly filing with the U.S. Securities and Exchange Commission says a potential combination with Tesla would require approval from the company’s special committee, its board and its “controlling shareholder.” Musk controls roughly 85% of SpaceX’s voting power, making him that controlling shareholder under the disclosure.
The filing means that Musk’s formal withdrawal from the merger discussions does not remove him from the approval process. The two companies established special committees on October 20 to assess the proposed deal, but SpaceX’s disclosure makes clear that shareholder approval would also be required on its side.
Analysts have estimated that a combined SpaceX-Tesla business could be worth about $3.5 trillion. Musk has described his exclusion from the negotiations as an unusual arrangement, while the filing suggests he could still have the final say on whether SpaceX approves the transaction.
Independent review faces governance questions
Musk recused himself from both special committees, which were created to provide an independent review of the proposed combination. However, according to Decrypt, Reuters reported that Musk’s public endorsement of the deal earlier in October complicated that process. People familiar with the matter reportedly described his comments as creating a “mess” for committees seeking to negotiate at arm’s length.
That issue is central to the governance debate surrounding the proposal. A special committee is generally intended to evaluate a transaction independently when executives or major shareholders have potentially conflicting interests. Musk’s interests overlap with both companies, and SpaceX investor disclosures have identified those overlapping interests as a material risk.
Critics have pointed to Tesla’s 2016 acquisition of SolarCity as a relevant precedent. Musk was involved with both businesses at the time, and the transaction later cleared Delaware courts. The earlier deal is therefore being cited in discussions about how Tesla and SpaceX might handle the proposed merger’s conflicts.
Tesla vote faces a high approval threshold
Tesla shareholders would need to approve the transaction with at least 50% of all outstanding shares. That is a higher hurdle than receiving a simple majority of the votes cast, because shares that are not voted would still count against the proposal. Musk himself has called the requirement “quite a high hurdle.”
A shareholder vote is expected at or near Tesla’s annual meeting on December 3. REX Financial estimates that Musk would hold roughly 57% of the combined company’s voting power if the merger goes ahead. The proposal therefore involves both a demanding Tesla shareholder vote and a SpaceX approval process in which Musk’s voting control remains significant.
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