Elon Musk said on Monday that SpaceX has acquired his artificial intelligence startup xAI in a record setting deal that brings together his ambitions in space and AI by combining the rocket and satellite company with the developer of the Grok chatbot.
The transaction, first reported by Reuters last week, marks one of the most ambitious tie ups in the technology sector to date. It links a major space and defence contractor with a fast growing artificial intelligence firm whose costs are driven largely by chips, data centres and energy. The deal could also strengthen SpaceX’s data centre ambitions as Musk intensifies competition with rivals including Google, Meta, Amazon backed Anthropic and OpenAI.
According to a person familiar with the matter, the transaction values SpaceX at about $1 trillion and xAI at $250 billion. Investors in xAI will receive 0.1433 shares of SpaceX for every xAI share they hold. Some xAI executives may also opt to receive cash instead of SpaceX stock, priced at $75.46 per share.
“This marks not just the next chapter, but the next book in SpaceX and xAI’s mission,” Musk said, describing the goal as scaling technology to better understand the universe and expand human consciousness beyond Earth.
Record Breaking Deal
The acquisition sets a new record for the largest mergers and acquisitions deal ever announced. That distinction had stood for more than 25 years, since Vodafone’s $203 billion hostile takeover of Germany’s Mannesmann in 2000, according to data compiled by LSEG.
Another person familiar with the deal said the combined SpaceX xAI entity is expected to price shares at roughly $527 each. SpaceX was already the world’s most valuable privately held company, most recently valued at about $800 billion in an insider share sale. xAI was last valued at around $230 billion in November, according to the Wall Street Journal.
The merger comes as SpaceX prepares for a blockbuster public offering later this year. Two people familiar with the matter said such an IPO could value the company at more than $1.5 trillion.
Consolidation Of Musk’s Business Empire
The deal further tightens Musk’s sprawling business empire into a more interconnected ecosystem that some investors and analysts refer to informally as the Muskonomy. That network already includes electric vehicle maker Tesla, brain implant company Neuralink and infrastructure venture the Boring Company.
Musk has a track record of folding his companies together. Last year, he merged social media platform X into xAI through a share swap, giving the AI firm access to vast amounts of data and distribution. In 2016, he used Tesla stock to acquire SolarCity, his solar energy business.
SpaceX, xAI and Musk did not immediately respond to requests for comment.
Scrutiny And Regulatory Risks
The agreement is likely to draw close scrutiny from regulators and investors. Concerns may focus on governance, valuation and potential conflicts of interest given Musk’s overlapping leadership roles across multiple firms. The movement of engineers, proprietary technology and contracts between companies could also raise questions.
SpaceX holds billions of dollars in contracts with NASA, the U.S. Department of Defense and intelligence agencies. Those relationships give government bodies some authority to review major corporate transactions for national security and other risks.
As Musk continues to knit together his companies, the SpaceX xAI merger represents a bold step that could reshape both the artificial intelligence and space industries, while also testing regulatory boundaries and investor confidence.
With inputs from Reuters
